Investors bid to buy PGN shares at Rp 1,500 ?Rp 1,600 but govt wants above Rp 2,100

Several investors had offered to buy state-owned gas utility company PT Perusahaan Gas Negara (PGN) shares at a price between Rp 1,500 and Rp 1,600 but the government wants to sell it above Rp 2,000 per share, Bisnis Indonesia, Koran Tempo and Investor Indonesia newspapers reported Tuesday.

Government has earlier fixed the indicative price range for PGN?s shares at Rp 1,300-Rp 2,100 for the initial public offering or in compare to its enterprise value/EBITDA (earning before interest, tax, depreciation and amortization) of 5-7.25 times.

Surprisingly, more local investors entered into the fray to buy PGN?s shares than their foreign counterparts.

?As per the temporary results, the total number of local investors -- who were earlier expected to be in minority -- are more than foreign investors who want to buy PGN shares,? one source from a fund management who submitted the offer for book building told Bisnis Indonesia on Monday.

But according to Indra Novan Ginting, president director of PT MLC Investment Indonesia, the PGN?s share price will not be more than Rp 1,500, close to the minimum indicative price.

?We see PGN as too fat and not efficient,? Indra said.

Having received positive response from both local as well foreign investors during its roadshow, the government wants to sell PGN?s shares at a premium price.

?Government wanted to sell if possible above Rp 2,000 per share, deputy assistant to state minister for state enterprises Pandu Djajanto told Koran Tempo on the sidelines of a function to celebrate Idul Fitri at the ministry of finance.

The government has so far received indicative offers worth around Rp 4.2 trillion for its sale of up to a 39% stake in PGN during a recent roadshow, a government official said.

"The indicative demand has already exceeded our target of funds from selling the stake in PGN," Mahmuddin Yasin, a deputy at state enterprise minister, told reporters on Monday.

The government expects to raise around Rp 2 trillion from selling the stake is PGN, Yasin added.

The government will sell up to 1.69 billion shares of PGN, of which 1.29 billion will be issued in the first stage. The remaining shares will be issued if the first batch is oversubscribed.

The shares will be sold through an initial public offering which will be open for subscription from Dec. 8 to Dec 10.

The stock will be listed on the Jakarta and Surabaya stock exchanges Dec. 15.

PGN is expected to determine the price of the shares on Wednesday. (*)