JAKARTA: About 57% or IDR2.74 trillion PT Garuda Indonesia initial public offering (IPO) will be absorbed by the emission underwriters namely PT Mandiri Sekuritas, PT Bahana Sekuritas and PT Danareksa Sekuritas.PT Bhakti Securities Head of Research unit Edwin Sembayang through their research, released yesterday, stated the high share absorption by the underwriters showed that Garuda IPO did not attract investors.Its shocking and unexpected that Garuda was only experiencing 1.3 times oversubscribed. No wonder 57% of the bookbuilding filled by underwriters. This is the first time underwriters take over such a big number, as he said, yesterday.Confirmed separately, President of Danareksa Sekuritas Marciano Herman said that to date, underwriters have not finished shares distribution. He also does not know the exact number to be absorbed by underwriters.New offering will be conducted early February, so we do not know the amount absorbed. Garuda, actually, catch investor eyes.According to him, based on price valuation, Garuda fix price at IDR750 is categorize as expensive if compared to other competitors like Singapore Airline, Cathay Pasific, Air Asia and Malaysia Airlines.Plus, he continued, Garuda also unable to compete with other domestic airlines namely Lion Air particularly on market share on domestic aviation industry.Amid to the tight competition, profit margin is pretty small. Thus, efforts to increase revenues through purchasing new aircraft to open new flight route will be difficult to achieve.It is true some of IPO fresh funds will be allocated to buy airplanes. However, 24% or IDR1.42 trillion of the proceeds will be used to pay our debt to Bank Mandiri.By counting the factors, Sembayang viewed it was not surprising that foreign investors showed less interest in buying Garuda shares. The fixed price should be between IDR550-IDR600 so they will be beneficial for the investors.Almost simultaneously with the research publication, there were rumors that number of domestic investors were canceling their procurement of Garuda IPO at PT BNI Securities, member of Garuda IPO syndications.However, the issue was denied by PT BNI Securities President Jimmy Nyo.Domestic InvestorOn separate place, Minister of State-owned Enterprise Deputy of Restructuring and privatization Pandu Djajanto emphasized that government decision to prioritize domestic investors on Garuda IPO will also applied to next SOE IPO.When asked on the decision to prioritize local investor in Garuda IPO was taken since the shares were not attractive in international market, Djajanto said they have been a follower of foreign investors on some SOEs privatization.As the result, SOE that hold a public offering did not get maximum fund due to following foreign investors desire. It is time for SOE to set our own share price and providing bigger allocation for domestic investors.He also assured that beside Garuda, which 80% of its shares managed by domestic investor, the decision to provide bigger portion for local investor will also applied on PT Bank Mandiri Tbk right issue where domestic investors own 60% of the total shares.Responding to this, Herman believed that, for underwriter, there is no distinction between domestic and foreign investors. Underwriter also not positioned domestic investors as a safety when foreign investors do not absorb the shares. it is Ministry of SOE decision to prioritize local investors. (T05/wiw)

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