INDONESIAN conglomerate Salim is rumoured to be establishing a US$1 billion (HK$7.7 billion) war chest for investment in China.
The funds are being raised through the sale of Indonesian corporate assets and, according to sources, will be leaving for the mainland.
They say half of the rumoured figure will come from a $500 million exchange bond for stock in its Indofood subsidiary.
The offer prospectus stated the funds would be used for the group's business activities inside Indonesia, but an analyst in Jakarta said: ''You have to ask why they are selling the family silver if the money is going to stay in Indonesia.'' A further $500 million is likely to be raised by selling a nine per cent stake in another subsidiary, Indocement, said sources. Salim holds a 60 per cent stake in Indocement and it is thought unlikely it would relinquish control of the company by sellingmore than a nine per cent holding.
Neither Salim nor UBS Securities, the firm's financial adviser for the exchangeable bond offering, could be obtained for comment.
The government's 26 per cent stake in Indocement is also a topic of speculation in Indonesia. One broker said: ''It has promised to make good losses sustained by a state bank and wants to cover the amount by selling its stake in Indocement.'' However, an analyst warned dumping so much stock in the market would be dangerous with the bearish sentiment that currently prevailed.
