Indonesia’s Bank Mandiri said on Wednesday it aims to raise between 13-14 trillion rupiah ($1.45-$1.56 billion) in a rights issue this year, double its previous target for the capital raising.
The rights issue would be the biggest in Indonesia by a state-owned company and the second-largest in the country after Bakrie & Brothers, a conglomerate controlled by the Bakrie family, raised about 40 trillion rupiah in 2008, a stock exchange official said.
“The number is huge but it means we will have enough capital until 2014. We’re not going to give a big discount on the offering as demand for Indonesian banking stocks is still high,” said Mandiri’s president director, Zulkifli Zaini, adding that the issue would probably go ahead around December 11-13.
“The key is getting the parliament’s approval. I’m confident of getting approval from the house this year in order to get the plan under way,” Zaini said.
Investors have snapped up Indonesian stocks and bonds over the past 18 months, attracted by strong economic growth fueled by domestic demand and commodities exports.
The stock index hit a record high last month, prompting several companies to push ahead with plans for share offerings.
State-owned airline Garuda Indonesia and steel giant Krakatau Steel are both lined up for IPOs in November.
Mandiri’s share price has risen 28 percent so far this year, beating the broader index which is up 20.5 percent. Mandiri’s shares, which hit an all-time high of 6,300 rupiah on July 15, closed down 1.67 percent on Wednesday at 5,900 rupiah.
“The expected capital to be raised from the rights issue is about 13-14 trillion rupiah,” Zaini said, adding that the bank will sell 2.3-2.4 billion new shares, or the equivalent of 10 percent.
As recently as July, Mandiri said it planned to raise 7 trillion rupiah.
The bank also said that it sees loan growth this year of over 20 percent, driven by strong domestic demand.
“We expect to beat our full-year forecast of loan growth of about 20 percent. We should beat the target, the growth will exceed it,” said Zaini. “Strong domestic demand will be the main driver for our loan growth.”
Indonesia’s biggest bank by assets also said it would set up an insurance joint venture and would inject 500 billion rupiah ($55.71 million) in its sharia unit.
“We have given the commitment to inject up to 500 billion rupiah in our shariah unit. We also plan to set up new general insurance with an international partner by the end of the year. We see insurance as a promising sector for growth in the future,” Zaini said.
http://www.thejakartaglobe.com/business/indonesias-mandiri-raises-rights-issue-eyes-156-billion/391734
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