Three lead underwriters of PT Garuda Indonesia (Persero) Tbk IPO have provided full commitment underwriting of Rp3.92 trillion proceed or 82.49% of its total deal.
In the IPO additional prospectus published today, the lead underwriters, PT Bahana Securities, PT Danareksa Sekuritas, and PT Mandiri Sekuritas have fully underwritten of Rp1.31 trillion respectively, while the remaining IPO of Rp831.96 billion will be handled by 53 underwriters with different size of underwriting respectively.
Fixed allotment is about 95% of the IPO and the remaining of 5% will be sold via pooling. Garuda Indonesia has downsized the IPO deal to 6.34 billion shares or 27.98% at Rp750 per share or Rp4.75 trillion deal.
Garuda will obtain Rp3.30 trillion cash by selling 4.40 billion new shares during the IPO and Bank Mandiri will seal Rp1.45 trillion from Garuda IPO by selling 1.94 billion existing shares.
A source close to the deal said one of lead underwriters is now struggling to meet its fully commitment of underwriting.
Each lead underwriter has committed to buy unsold Garuda shares worth Rp1.31 trillion. Regarding to the capital paid in, Bahana, Danareksa, and Mandiri Sekuritas record Rp1.15 trillion, far below their commitment to underwrite Garuda shares of Rp3.92 trillion.
The question is if the market doesn't absorb the stocks, which financing lead underwriters should take? or They will put Garuda stocks inside their book. What will happen if Garuda stocks plunge during the trading debut?
According to the source, it is still possible for the lead underwriters if SOEs Minister Mustafa Abubakar urges them to stick with their commitment. They can use external financing to absorb Garuda shares in the primary market.
"Under current circumstances, I want to know which bank is available to help the lead underwriters," said an investment banker at a foreign house.
Disclosure: No position at the stock mentioned above.
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