BNPP Bank Negara Indonesia - Government sold 3.1% stake at IDR2,900

The government sold 473.89m shares (3.1% stake) of BNI yesterday of which 70% was allocated to domestic and 30% to foreign investors. At IDR2,900 the government will collect IDR1.374t (USD152m) which will be used to help finance the state budget deficit.

Comment: This puts the bank valuation at around 2x P/BV 2010E compared to the industry average of 3.2x. Post the divestment the government still owns 73.1% of the bank, which plans to raise at least IDR6t through the rights issue by the year-end. It is expected that the government will not take their rights and to dilute their state further to 60% which will allow BNI to utilise the corporate income tax benefit (lower income tax to 20% from 25%) for companies with free float of >40%.