Danamon defies sceptics

Another equity blowout from an Indonesian bank in a $134 million deal.

As recently as two years ago if you had tried to sell equity in Indonesian banks to international investors you'd have been committed to an asylum, put in a cell and had the keys thrown down a very deep pit.

How things have changed. After Bank Mandiri's successful IPO, the appetite for Indonesian paper remained unsatiated and particularly for banks - which remain a good proxy for any investor wanting to take a bet on the Indonesian economy and its 200 million population.

Bank Danamon - via sole bookrunner, JPMorgan - has hence followed the success of Mandiri with a $134 million sale of IBRA's 20% stake in a deal that was 5.1 times oversubscribed.

A controlling stake in the bank had earlier this year been sold to a consortium of Temasek and Deutsche Bank for Rp1202 a share. The current deal was priced at Rs1325 and subsequently traded up in the aftermarket.

The lead manager spotted a window of opportunity last week and launched an accelerated bookbuilt transaction under a Reg S structure. No roadshows were used.

And no lead orders were sought. Indeed, IBRA had mandated JPMorgan to try and spread the deal among as many investors as possible. In the end over 40 participated with 40% in Europe and 50% in Asia. However, there was such demand for the stock that the entire some could reportedly have been sold to around 5-10 accounts.

In many ways the deal resembled more of an accelerated IPO than a block trade. That's because, with less than 1% of the company in free float, the deal had more of an initial public offer quality.

Enthusiasm for Indonesian paper, moreover, remains stong, and this bodes well for the healthy pipeline of deals expected from Jakarta.

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