Credit Suisse First Boston and ABN-Amro Rothschild were joint global co-ordinators and bookrunners for PT Bank Mandiri’s IPO
Shares in Bank Mandiri surged almost 26% on its market debut. The heavily oversubscribed IPO of a 20% stake in Mandiri was seen as a vote of confidence in Indonesia’s economic and political stability.
The listing had to confront serious challenges, not least nagging questions about the bank’s lending practices and the fact that almost 60% of its assets were tied up in government bonds used to recapitalise Indonesia’s banking sector foll-owing the 1997 Asian financial crisis. But there were also
lingering questions about corporate governance at the bank. Compounding this, few comparables existed to aid valuation; the IPO environment was poor; and the outbreak of SARS impacted marketing one-to-ones with investors.
Solutions included implementation of a comprehensive bank-wide risk management system; commitment to maintaining a dividend payout ratio of 50%; valuing Mandiri attractively relative to its peers, despite its dominant market position; and setting an attractive low end in the price range.
Eric Varvel, Credit Suisse First Boston’s head of investment banking in the Pacific (ex-Japan) observes, “The IPO clearly marks a high point in Indonesia’s bank restructuring. Few believed it would even get done at the start of 2003.”
