MARKETS | Tony Chua, Indonesia

Mandiri targets raising rights issue to $1.56bln

Lender waits for parliament’s approval in move that would sustain lender’s capital until 2014.

Indonesia’s Bank Mandiri said Wednesday it aims to raise between $1.45-$1.56 billion in a rights issue this year, double its previous target for the capital raising.

The rights issue would be the biggest in Indonesia by a state-owned company and the second-largest in the country after PT Bakrie & Brothers, a conglomerate controlled by the politically connected Bakrie family, a stock exchange official said.

“The number is huge but it means we will have enough capital until 2014. We’re not going to give a big discount on the offering as demand for Indonesian banking stocks is still high,” said Mandiri’s president director, Zulkifli Zaini, adding that the issue would probably go ahead around December 11-13.

“The key is getting the parliament’s approval. I’m confident of getting approval from the house this year in order to get the plan under way,” Zaini said.

Investors have snapped up Indonesian stocks and bonds over the past 18 months, attracted by strong economic growth fuelled by domestic demand and commodities exports.

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