Shane’s – The Pawn Shop, Inc

Indonesia Pawn Shop Firm Shelves IPO, Asks Govt for Capital
October 05, 2012

By: The Jakarta Globe

State-owned pawnshop operator Perum Pegadaian.
(Antara Photo/Andika Wahyu)

Indonesia’s biggest pawn shop operator PT Pegadaian has asked the government for a fresh capital injection after a plan to raise up to Rp 6.4 trillion ($668 million) in an initial public offering was turned down by the government, its chief executive said on Thursday.

The state-owned company, which makes loans to low-income Indonesians in exchange for collateral, has a clientele of 18 million and runs one of the largest financial networks in Indonesia.

Its IPO, eagerly anticipated by investors, would have been the biggest in the country in about two years.

“It is our shareholder’s decision but we need huge capital in order to expand the business,” Suwhono, Pegadaian’s CEO, told Reuters in an interview, adding that the company submitted the capital injection request late last month.

“So far, we are really dependent on external funding, with around 90 percent of our funding coming from loans and bonds.”

The CEO declined to say how much new capital the Jakarta-based company has asked from the government. The capital will be used to expand its Islamic pawn shop unit and retail gold trading businesses, he said.

Suwhono said the company expects its net profit to rise by 20 percent this year and revenue to grow by around 38 percent.

Reuters