JAKARTA: Amid the slowdown in the stock sales of PT Garuda Indonesia (persero) Tbk that will initially list its shares today, the government is preparing a scenario of rescuing the state airline's stocks by encouraging state insurance companies to enter secondary market.The scenario has to be taken after the unsold stocks rach 3 billion shares or equal to IDR2.25 trillion, which will be part of the underwriters' responsibility. Yet, there is an underwriter that has not yet extended full commitment to Garuda due to limited fund as the booking misses expectation.One executive involving in the Garuda's IPO process explains that the government will push state insurance companies to take Garuda's stocks at secondary market and save them from big fall.The state insurance companies like Jamsostek can not take bigger portion since the maximum number will be 5% from free float in the initial listing. Yet, if the insurance companies can buy at secondary market, that will not be prohibited and Garuda has good fundamental. According to the plan, GIAA-coded stocks of the national airlines will be traded effectively at Indonesia Stock Exchange today. The initial trading price will be IDR750 per unit.During the offering period, local investors secure 80% and 20% for foreign investors. The proble is of the 20% allocation for the foreign investors, they only absorb IDR91 billion or 1.9% of the total shares offered. The foreign cancellation also force the three appointed underwriters to absord the unsold stocks.The condition is confirmed from one executive involving in Garuda's IPO."The low absorption of Garuda's stocks is caused by low quality of future investors and not followed by bonafide investment managers. Some investment managers have not met their promises as they did not take the stocks as ordered, leading to low absorption."According to the source that understands the IPO, all happens because Minister of SOEs Mustafa Abubakar insists too much on setting the price above the proposal of joint lead underwriters-PT Bahana Securities, PT Danareksa Sekuritas and PT Mandiri Sekuritas- which has been consistent to propose the IPO price at IDR550-IDR650 per unit.Waiting for returnAccording to Head of Equity Sales Batavia Prosperindo Sekuritas Gurasa Siagian, said that almost no foreign investors are interested to buy Garuda's stocks since the price is too high. "New investors will buy when the price is IDR500-IDR550. For investors that have already bought, they shall be ready to wait for 1-2 years to enjoy the return," he said.About rumors saying that Bahana is the only underwriter which has not delivered the cash to Garuda as its full commitment to absorb the unsold, President Director of Bahana Securities Eko Yuliantoro denied it."All have been absorbed, and we have delivered the cash. If there were people who said not yet, please ask to the source of information," he confirmed.In separate occasion, at the signing of MoU on access to data and information electronically at BPK building yesterday, Minister of Finance Agus D.W. Martowardojo admitted to have heard such information on the slow absorption of the state airline's stocks, and the three underwriters shall be responsible for absorbing the unsold."Surely we are going to ask for report from Minister of SOEs. Yet, I see the local potential is quite big," he commented.According to him, Garuda's IPO program shall employ more creative system to gain results. The point is that Minister of Finance allows privatization of the state company only if the process involves related parties.Yet, the price determination depends on the roadshow. Thus, the securities companies, Ministry of SOEs and the organizing committee jointly determine the price.Besides, Minister of SOEs Mustafa Abubakar was reluctant to comment on the loss of three underwriters in the Garuda's IPO. The point is, he added, the state airline can raise fund to add its capital as expected. "The underwriters and management of Garuda Indonesia have had a meeting with me and updated the data and expressed their readiness for the listing today. The detail, is not my capacity to explain, and we already had a deal," he explained.Mustafa's statement was in line with statement of Garuda's President Director Emirsyah Satar.According to him, the initial stock release is considered to be fully subscribed."We are fully subscribed. We raise IDR3.3 trillion. Local investors get bigger portion, yet for details, the composition, we don't know yet, today okay," he said. In separate occasion, an economist, Drajad H. Wibowo saw Minister of SOEs and his officers need to learn more on stock market so that cases of two state companies's privatization will not repeat in the future. "When stock market is bullish, Krakatau Steel is priced too low. Yet, when the market is bearish, Garuda's stocka get less adjusted. The Minister of SOEs and his officers must learn more," said Drajad.Different from Drajad, Adler H. Manurung, a professor and expert in stock market, said that compared to Krakatau Steel's IPO that raised IDR4.96 trillion, about 40% of them was bought by foreign investors. It means that domestic investors only purchased for IDR2.9 trillion.Meanwhile, Garuda raised IDR4.7 trillion of which IDR2.2 trillion was absorbed by the underwriters and foreign owns less than 2%. It means that domestic investors purchased for IDR2.5 trillion. (NOM)
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