Garuda $500 Million IPO Kicks Off Busy Year in Indonesia

Jakarta Globe, Denny Thomas & Vikram Subhedar | January 04, 2011

Hong Kong. Flag carrier PT Garuda Indonesia launched an up to $500 million initial public offering (IPO) on Tuesday, kicking off a busy year for capital-raising in Southeast Asia's biggest economy.

A Garuda Indonesia airplane undergoes maintenance work in the
Garuda Maintenance Facility at Soekarno-Hatta International
Airport in Cengkareng, Indonesia. The flag carrier launches an up
to $500 million initial public offering (IPO) on Tuesday. (Bloomberg
Photo)

Indonesia's fast-growing economy is attracting interest from foreign investors, encouraging companies to tap equity markets.

Indonesia's benchmark share index .JKSE jumped 46 percent last year, in-part supported by $2.18 billion in foreign portfolio inflows, which was more than double the level in 2009.

Banks are also raising fresh capital to support an expected pick up in lending growth. PT Bank Mandiri Indonesia Tbk BMRI.JK, the nation's biggest lender, was raising up to $1.6 billion to support credit growth, according to a term sheet seen by Reuters.

The Indonesian government had initially planned to launch the Garuda IPO in November last year, but later delayed it for 2011.

The company aimed to list on Feb. 11, the term sheet said.

"IPOs of this size and nature will be a key feature of the industrialisation process driving ASEAN growth," said Singapore-based Geoff Howie, a sales and markets strategist at MF Global, referring to the Association of Southeast Asian Nations grouping.

"As the economic modernisation of Indonesia, Malaysia and Thailand continues, their new and existing financial assets will continue to provide investable economics," he added.

Citigroup Inc C.N and UBS AG UBSN.VX are the international book runners for Garuda's offer.

Reuters