JAKARTA, April 11 (Reuters) – PT Bumi Resources (BUMI.JK), Indonesia’s biggest coal producer, wants to list its non-coal mining assets which it values at $1.9 billion, in a $1 billion initial public offering later this year, sources told Reuters.

Credit Suisse (CSGN.VX), which has advised Bumi on several deals in the past, and J.P. Morgan (JPM.N), were among the banks approached to advise on the Jakarta listing, two sources said.

Investors have snapped up assets in Southeast Asia’s biggest economy over the past year, attracted by strong growth, political stability, and prospects for an investment grade credit rating.

The benchmark stock index .JKSE hit an all-time high this month, and the share rally has encouraged a flurry of deals including placements for cement giant PT Semen Gresik (SMGR.JK) and mobile phone operator XL Axiata (EXCL.JK).

Bumi, which has a stock market value of $5.4 billion, is the prize asset of the Bakrie group, a conglomerate controlled by the family of tycoon and politician Aburizal Bakrie.

The Bakrie group has property, telecoms, energy, and plantations interests and has raised more than $4 billion in recent months from loans, bonds, and share issues, with plans to raise a further $550 million from bond sales.

Bumi has already set up a separate unit, PT Bumi Resources Mineral (BRM), to manage its gold, copper, zinc, lead and iron ore interests in Indonesia and Africa.

Now Bumi is considering listing BRM in Jakarta in an IPO to raise more than $1 billion, three people familiar with the plans told Reuters. They declined to be quoted by name.

“We’ve formed BRM (Bumi Resource Minerals) and announced this to our regulators. Intent is to inject our unvalued (by market) $1.9 billion acquisition cost of our non-coal assets into them and to sharply focus attention on developing them through an independent management,” Dileep Srivastava, Bumi’s investor relations director, said in a telephone text message to Reuters.

Spinning off the other mining interests “was a logical strategic step to unlock the value of our high-potential non-coal assets,” he said, adding that “announcements on their future plans will be made in due course as per established procedure.”

Srivastava said that Bumi needs to spin off the non-coal assets because its core coal assets were undervalued.

Bumi’s total assets were valued at $7.41 billion at the end of 2009. It has a price-to-book ratio of 3.64, compared with 4.85 for rival PT Adaro Energy (ADRO.JK), and 7.1 for PT Tambang Batubara Bukit Asam (PTBA.JK), Reuters data showed. But in terms of price-earnings ratio, Bumi shares look more expensive at 26.4 times, against 18.2 for Adaro and 14.9 for Bukit Asam.

SOURED RELATIONS

Some investors consider Bumi’s strong political connections an advantage given that Aburizal Bakrie heads Golkar, one of the largest parties in the ruling coalition. But relations between Golkar and key reformers in President Susilo Bambang Yudhoyono’s government have soured recently, and the tax office has said it is investigating Bumi for alleged tax evasion.

Concerns over whether Bumi will have to pay taxes and fines have hit the stock, up 3 percent this year, while the index is up 12 percent and recently set an all-time high.

Bumi’s non-coal assets consist of several recent acquisitions including Herald Resources, which controls a large zinc and lead mine in Dairi, North Sumatra.

Bumi bid A$563 million for an 84.2 percent stake in Herald Resources, which at the time was listed in Australia, and bought the remaining shares in the market. It has allocated about $211 million for the development of the Dairi zinc and lead mines, and initial production is expected to start in 2011.

BRM also owns PT Multicapital, which last year teamed up with three local governments in Indonesia’s West Nusa Tenggara to pay $885 million for a 24 percent stake in PT Newmont Nusa Tenggara (NNT), a unit of U.S. miner Newmont Mining Corp (NEM.N).

Newmont was required by Indonesian law to divest its stake in the firm, which controls the lucrative Batu Hijau copper and gold mine in Sumbawa. The Bumi-backed consortium also plans to acquire another 7 percent stake in NNT that has been offered this month and valued at $444 million.

BRM’s other assets include gold and copper projects in Gorontalo and Palu in Sulawesi: Bumi earmarked $500 million for investment in the projects, with production due to start by 2013.

Another unit, Lemington Investment, owns an iron ore project in Mauritania, Africa. BRM has allocated $300 million to develop the project, which should be in operation next year.

Most of the funding that Bumi plans to invest in the various non-coal projects will come from a $1.9 billion loan provided by China Investment Corp., the Chinese sovereign wealth fund, late last year. (Editing by Sara Webb)

JAKARTA, April 11 (Reuters) – PT Bumi Resources (BUMI.JK), Indonesia’s biggest coal producer, wants to list its non-coal mining assets which it values at $1.9 billion, in a $1 billion initial public offering later this year, sources told Reuters.

Credit Suisse (CSGN.VX), which has advised Bumi on several deals in the past, and J.P. Morgan (JPM.N), were among the banks approached to advise on the Jakarta listing, two sources said.

Investors have snapped up assets in Southeast Asia’s biggest economy over the past year, attracted by strong growth, political stability, and prospects for an investment grade credit rating.

The benchmark stock index .JKSE hit an all-time high this month, and the share rally has encouraged a flurry of deals including placements for cement giant PT Semen Gresik (SMGR.JK) and mobile phone operator XL Axiata (EXCL.JK).

Bumi, which has a stock market value of $5.4 billion, is the prize asset of the Bakrie group, a conglomerate controlled by the family of tycoon and politician Aburizal Bakrie.

The Bakrie group has property, telecoms, energy, and plantations interests and has raised more than $4 billion in recent months from loans, bonds, and share issues, with plans to raise a further $550 million from bond sales.

Bumi has already set up a separate unit, PT Bumi Resources Mineral (BRM), to manage its gold, copper, zinc, lead and iron ore interests in Indonesia and Africa.

Now Bumi is considering listing BRM in Jakarta in an IPO to raise more than $1 billion, three people familiar with the plans told Reuters. They declined to be quoted by name.

“We’ve formed BRM (Bumi Resource Minerals) and announced this to our regulators. Intent is to inject our unvalued (by market) $1.9 billion acquisition cost of our non-coal assets into them and to sharply focus attention on developing them through an independent management,” Dileep Srivastava, Bumi’s investor relations director, said in a telephone text message to Reuters.

Spinning off the other mining interests “was a logical strategic step to unlock the value of our high-potential non-coal assets,” he said, adding that “announcements on their future plans will be made in due course as per established procedure.”

Srivastava said that Bumi needs to spin off the non-coal assets because its core coal assets were undervalued.

Bumi’s total assets were valued at $7.41 billion at the end of 2009. It has a price-to-book ratio of 3.64, compared with 4.85 for rival PT Adaro Energy (ADRO.JK), and 7.1 for PT Tambang Batubara Bukit Asam (PTBA.JK), Reuters data showed. But in terms of price-earnings ratio, Bumi shares look more expensive at 26.4 times, against 18.2 for Adaro and 14.9 for Bukit Asam.

SOURED RELATIONS

Some investors consider Bumi’s strong political connections an advantage given that Aburizal Bakrie heads Golkar, one of the largest parties in the ruling coalition. But relations between Golkar and key reformers in President Susilo Bambang Yudhoyono’s government have soured recently, and the tax office has said it is investigating Bumi for alleged tax evasion.

Concerns over whether Bumi will have to pay taxes and fines have hit the stock, up 3 percent this year, while the index is up 12 percent and recently set an all-time high.

Bumi’s non-coal assets consist of several recent acquisitions including Herald Resources, which controls a large zinc and lead mine in Dairi, North Sumatra.

Bumi bid A$563 million for an 84.2 percent stake in Herald Resources, which at the time was listed in Australia, and bought the remaining shares in the market. It has allocated about $211 million for the development of the Dairi zinc and lead mines, and initial production is expected to start in 2011.

BRM also owns PT Multicapital, which last year teamed up with three local governments in Indonesia’s West Nusa Tenggara to pay $885 million for a 24 percent stake in PT Newmont Nusa Tenggara (NNT), a unit of U.S. miner Newmont Mining Corp (NEM.N).

Newmont was required by Indonesian law to divest its stake in the firm, which controls the lucrative Batu Hijau copper and gold mine in Sumbawa. The Bumi-backed consortium also plans to acquire another 7 percent stake in NNT that has been offered this month and valued at $444 million.

BRM’s other assets include gold and copper projects in Gorontalo and Palu in Sulawesi: Bumi earmarked $500 million for investment in the projects, with production due to start by 2013.

Another unit, Lemington Investment, owns an iron ore project in Mauritania, Africa. BRM has allocated $300 million to develop the project, which should be in operation next year.

Most of the funding that Bumi plans to invest in the various non-coal projects will come from a $1.9 billion loan provided by China Investment Corp., the Chinese sovereign wealth fund, late last year. (Editing by Sara Webb)