Jan 24, 2011

Garuda Indonesia may downsize IPO

Indonesia’s flag carrier, PT Garuda Indonesia Tbk might downsize shares size being offered on its initial public offering (IPO) from the previous amount of 9.36 billion.
An executive familiar with the discussion of such plan, as reported by Bisnis Indonesia today, said that the option echoed merely due to the relatively expensive IPO’s stock price, causing significant difficulties for the underwriters supposed they have to sell the shares at Rp750-Rp1,100 per unit.
“During the road show, many investors perceived that the stock price is relatively expensive compared to other airlines since Garuda set the stock price at Rp750-Rp1,100 per unit.”
“In order to be fully absorbed, possibly Garuda will cut the share volume being released,” he said last week. With the shares volume and the given stock price, Garuda may derive Rp6.97 trillion-Rp10.23 trillion. The shares volume issued to the market represents 36.48% of the total listed shares, 25.7 billion shares.

Disclosure: No position at the stock mentioned above.

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