Indonesia's Garuda says plans to raise up to $400 mln in IPO

Reuters, Wed Aug 26, 2009 7:32am EDT

JAKARTA, Aug 26 (Reuters) - Indonesia's flag carrier PT Garuda Indonesia plans to raise up to $400 million in an initial public offering in June next year to fund its expansion, a senior executive said on Wednesday.

President Director Emirsyah Satar told Reuters that the firm plans to hold the IPO in June 2010, but details of the offering, such as the percentage of shares that are going to be privatised and the underwriter, are still being discussed.

"The target is to raise $300 million to $400 million, which will be used to strengthen our capital structure as well as for expansion," said Satar.

Indonesia's airline industry has been hit by several serious accidents in recent years, prompting the European Union to ban all Indonesian airlines from entering its airspace.

Garuda was one of four Indonesian airlines to be taken off the list of banned airlines recently, following safety improvements, and it now hopes to start flights to Amsterdam.

Analysts said the IPO would probably be well-received as Garuda may benefit from rising demand for domestic air travel.

"Garuda's IPO will really support the firm's financial condition as the funds raised from the IPO can be used to pay (down) its debt, decreasing the burden and making it possible to buy new planes for expansion," said Norico Gaman, head of research in brokerage firm PT BNI Securities.

Garuda is in the process of restructuring its debts, which it expects to complete in two months.

Gaman also said the IPO would encourage good corporate governance and efficiency, enabling the airline to compete in Indonesia's crowded airline market.

Transportation ministry data shows there are 15 scheduled commercial airlines in Indonesia, some of which also serve international routes. In September 2008, an Indonesian parliamentary commission approved the government's plan to privatise several state firms including Garuda, but the global financial crisis meant share sales were postponed. (Reporting by Tyagita Silka; Editing by Sara Webb)

Hortus Danavest signs tie-up deal with Malaysian investment bank

The Jakarta Post, Jakarta

Publicly listed securities firm PT Hortus Danavest has formed a strategic alliance with Malaysian bank Kenanga Investment Bank to offer crossborder equity trading and corporate financing facilities.

Hortus president director Antony Kristanto said Wednesday that the partnership would promote crossborder equity trading between Indonesia and neighboring Malaysia.

Indonesian investors would, for example, be able to buy stocks traded in the Malaysian stock market through Hortus, while Malaysian investors would be able to engage in equity trading in Indonensia through Kenanga, Antony said.

With the agreement, the two securities companies could also arrange the cross-listing of Indonesian firms on the Malaysian stock exchange and Malaysian companies on the Indonesian bourse, he added.

"Equity brokerage, stock cross-listing and initial public offerings are the main focuses of the agreement," Antony said. "Investment banking, which Hortus has yet to develop, is the second area for cooperation."

According to Kenanga Investment chief executive officer and director Tunku Afwida Malek, Kenanga Investment's venture into the Indonesian market was part of its global expansion plan.

"Essentially, this partnership allows us to leverage on each other's strengths. Kenanga cannot survive as a local investment bank, so we have to branch out outside of Malaysia, especially in distributing our products and meeting global market demands," Afwida explained.

She added that Indonesia had significant market potential that was largely untapped, particularly for Islamic financial products like Islamic bonds, or sukuk.

Hortus Danavest, established in 1989, went public in 2004 and is now one of Indonesia's ten largest stockbrokers with a market share of around 5 percent.

Kenanga Investment, a subsidiary of K&N Kenanga Holdings, is Malaysia's third largest securities house with 25,000 clients. The company provides a range of services, including stock and derivatives trading, treasury, corporate finance, investment banking and Islamic securities services.(amr)