Indonesia may be among the hottest emerging markets but next month’s initial public offering of flag-carrier Garuda looks unlikely to be a soaring success.
As Reuters correspondents Janeman Latul and Fathiya Dahrul reported last week, underwriters had suggested a range of 560 to 850 rupiah. But after President Susilo Bambang Yudhoyono got involved, summoning his top economic team including State Enterprises Minister Mustafa Abubakar for a meeting, the range was set at 750 to 1,100 rupiah per share.
That means an Enterprise Value to EBITDA of 7.4 to 10.8 times – well above Singapore Airlines at 4.9 times, and Thai Airways THAI.BK at 5 times. And some of those involved in the IPO have grave doubts it will fly at that price: