The players in Indonesia's big sale


The BCA sale is the most significant privatization under Megawati, and her administration says more is to come

By Alex Frew McMillan
CNN

HONG KONG, China -- Indonesia hopes the sale of a majority stake in Bank Central Asia, the country's largest retail bank, will cause overseas investors to beat a return to that country.

It certainly frees up much-needed cash for the strapped government of President Megawati Sukarnoputri. It should also mean an essential loan program goes ahead (full story).

But the deal, which finally went through on March 14, has been delayed repeatedly and has developed quite a history. Here's a brief rundown of the main players.

The winner: FarIndo Investments Ltd. The full name of the consortium that has agreed to buy 51 percent of BCA, a deal slated to close within six months. (full story)

The money: Farallon Capital Management. The $8 billion U.S. arbitrage fund lined up the funding, with advice from Deutsche Bank. (full story)

The partner: Alaerka Investments Ltd. Farallon has partnered with Alaerka, owned by Indonesian brothers Robert Budi Hartono and Michael Bambang Hartono, who also run the Djarum clove cigarette company.

The loser: Standard Chartered. The London-based bank was the final bidder against FarIndo. It walked away from Bank Bali in 1999 and has now missed out on another chance. Still interested in expanding in Indonesia.

The referee: Laksamana Sukardi. Indonesia's Minister of State Owned Enterprises is supervising business and economic reform, and overseas the influential Indonesian Bank Restructuring Agency (IBRA). Tussled with IBRA chairman I Putu Gede Ary Suta over making the final call on the sale. (story on Laksamana)

The prize: Bank Central Asia. Indonesia's largest main street bank. It has accounts with most banking households in the country. But workers are worried the sale will cost them their jobs.

The previous owner: Salim Group. Ethnic Chinese patriarch Sudono Salim (also known by his Chinese name Liem Sioe Liong) built BCA into its dominant position in Indonesia. But the Salim conglomerate crumbled under vast debts in the 1997-98 Asia crisis. Son Anthony Salim now runs its Indonesian operations. Critics fear the Salims will buy BCA back in the aftermarket. (full story)

The interested party: International Monetary Fund. The IMF bailed Indonesia out in the Asia financial crisis, during which almost all its banks collapsed. Subsequent investigations showed most of the aid money was abused. The IMF has demanded reform progress to continue its $4.5 billion loan package. (full story)