JAKARTA: One of lead underwriters for Garuda IPO is still struggling to meet its underwriting quota.Garuda IPO lead underwriters are Bahana Securities, Danareksa Sekuritas, and Mandiri Sekuritas. They are all affiliated local houses with Ministry of State-Owned Enterprises (SOEs).The lead underwriters are now gathering about 50 syndicated underwriters with a total underwriting of IDR1 trillion. "With the IPO size of IDR4.7 trillion, syndicated underwriters would underwrite about IDR1 trillion and the remaining of IDR3.7 trillion will be fully underwritten by the lead undewriters," the source said. With the bulk of underwriting, each lead underwriter has fully committed to underwrite IDR1.23 trillion of Garuda primary shares. "There is one lead underwriter which is currently struggling to meet its quota. It has sold less than IDR500 billion. But, the commitment burdens them. The unsold stocks of IDR730 billion may be shared among lead underwriters," the source said.Bahana Securities President Director Eko Yuliantoro said Bahana is still trying to sell Garuda, following the target."Somehow, we keep trying to sell Garuda. We can't comment on the market demand," he said.Marciano Herman, President Director of Danareksa Sekuritas, is unreachable for comment.According to the source, it is still possible for the lead underwriters if SOEs Minister Mustafa Abubakar urges them to stick with their commitment. They can use external financing to absorb Garuda shares in the primary market."Under current circumstances, I want to know which bank is available to help the lead underwriters," said an investment banker at a foreign house.Regarding to the capital paid in, Bahana, Danareksa, and Mandiri Sekuritas record IDR1.15 trillion, far below their commitment to underwrite Garuda shares of IDR3.7 trillion. Core problemThe core problem for the underwriting commitment will not end when they can absorb unsold shares."The main problem for the lead underwriters begins when Garuda stocks plunge far below the IPO price of IDR750 per share," the source said. With each lead underwriter still keeps Garuda stocks in its book, they will potentially suffer in red. Initially, the lead underwriters proposed the IPO price at IDR560 per share to Mustafa Abubakar. "If Garuda falls to IDR560 per share during its trading debut, the lead underwriters may suffer IDR190 per share of capital loss. Don't be shock if you see Bahana, Danareksa, and Mandiri Sekuritas's bottom line are in red." (wiw)

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