Investor ire over Bakrie-linked firm’s bid for oil

Marion Dakers
SHAREHOLDERS in a Jakarta-listed energy firm with ties to the Bakries are calling for answers after the company made a $225m (£144m) offer for oil and gas assets that investors claim are also linked to the family.

Energi Mega Persada (EMP), in which the Bakrie family holds a minority stake, has announced plans for a rights issue that will be used to buy out the rest of EMP International, which owns oil and gas fields off the coast of Java.

But CIM Investment Management, a London-based firm that represents a 7.7 per cent stake in EMP, wrote to the Jakarta Stock Exchange last month asking it to look more closely at the deal.

Recent company documents state that one of two investors in the ultimate owners of EMP International, Densel Ventures, is controlled by Bakrie & Brothers Tbk, a Jakarta-listed holding company for the Bakrie family’s ventures.

CIM’s chief investment officer James Morton has lobbied the Jakarta Stock Exchange to investigate the acquisition for possible conflicts of interest, claiming the rights issue prospectus “raises questions regarding the fairness of this valuation”.

“Only that way can they assure all investors, local and foreign, that their legal rights will be protected by the authorities when a company tries to sneak through a questionable transaction,” he said.

CIM also complained that the announcement was made on a Friday afternoon, before a week of public holidays in Indonesia.

EMP has delayed a shareholder meeting, due last week, until 17 September but has given no reason for the rescheduling. A spokesperson for the Bakries declined to comment yesterday.

“It’s a great shame as this is a fantastic company that needs to be run for the interests of all shareholders,” Morton told City A.M.

“The Bakries have been notable in their lack of contact with shareholders over this.”

THE BAKRIES burst onto the London market in 2010, when the family’s coal mining group Bumi Resources teamed up with Nat Rothschild’s investment vehicle Vallar.

At the time, the unusual deal was heralded by Vallar as the “creation of London-listed Indonesian coal champion”, allowing a fast-growing overseas firm to bag a premium UK stock market place along with the prestige of a partnership with the Rothschild family.

But the relationship soon soured, causing shares in the newly-renamed Bumi PLC spiraling in the wake of increasingly acrimonious public letters and court battles.

After failing to get the board replaced with his own candidates last year, Rothschild agreed to split the company, in a divorce deal that is yet to end. Bumi is set for demotion from the FTSE 250 index later this week, with its shares trading 15 per cent lower than they were before suspension in April for failing to publish results.

But Bumi is a tiny part of the Bakrie family’s empire. The Indonesian dynasty has interests in property, telecoms and agriculture as well as mining through the Bakrie & Brothers investment company. The brothers in question, Nirwan and Aburizal Bakrie, are among the richest men in Indonesia.

Aburizal, the elder brother, left the company several years ago to focus on politics, and is expected to run in Indonesia’s 2014 presidential elections.