Tuesday, February 26, 2008

Bakrieland Likely to Gather 3.5 Trillion Rupiah through Unit Stake Sale

by Michelle Roberts

Indonesia’s largest property developer by value, Bakrieland Development is likely to raise an amount of 3.5 trillion Indonesian Rupiah that is $385 million in the current year. The biggest property developer will be raising the funds by way of selling its stakes in a homebuilding section and toll road ownership. U.S. hedge fund Avenue Capital Group has its 25% ownership in Bakrieland Development. President Director of Bakrieland Hiramsyah S. Thaib said the firm had talks with investors from Asia and Europe regarding the sale of stakes in each of the units which amounts to 30%. The president director further said that the profit for the company in the year 2007 increased by 92% and the company is also relying on the economic growth for almost over a decade to increase earnings and attract foreign investors.

Bakrieland anticipates proceeds from its toll roads by nineteen percent which is nearly double the return gained on the ten year bond of the Indonesian government. The same maturity yields from US treasuries which give 3.8% for the investors. Head of research at Jakarta-based PT NISP Sekuritas, Arief Budiman expressed that people expect greater quality when there is an involvement of overseas investors and hence the projects can yield greater returns if backed by foreign investment. Authorization from market regulators is not needed hence raising the funds becomes quite easy, the head of the company which deals with $395 million in assets said.

The planned sale of stakes by PT Bakrieland Development in PT Graha Andrasentra Propertindo and PT Bakrie Toll road followed because the property unit of Gulf sheikhdom Dubai announced in October that it is likely to put in an investment of as much as 2 trillion Rupiah to acquire a 30% control in PT Bakrie Swasakti Utama of the Bakrieland Development. During an interview in Jakarta, the President Director, Thaib said that Indonesia is attracting investors because of greater returns and his company also promises a fair deal for investors to invest in its projects.

There was a great profit surge recorded for Bakrieland which has its project running known as Rasuna Epicentrum in central Jakarta which is a residential as well as an office complex. Thaib also said that in the last year the profit for the company shot by 130 billion Rupiah. The sale for the company also increased by 78% to 700 billion Rupiah and in Jakarta the shares of the company increased by 3% to 690 Rupiah which is the highest price it reached since October 18. The stock has grown by three times in the year that concluded. The analyst at UBS AG Felicia Tandiyono, in the Feb. 6 note, told the clients that negative signals could be sent to stock if there is any delay in the projects of Bakrieland, the analysts further added in the note that if the management fails to carry on, the future projects of Bakrieland will be judged with more watchfulness by investors.

 

 

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