Krakatau Steel IPO to raise up to $389 mln - sources

* Aims to raise 2.5 trln rph to 3.47 trln rph in Nov IPO

* Price range set at 800 rph to 1,100 rph per share-sources

* Price range values Krakatau at $1.4 bln to $1.92 bln

* Price range represents 11 to 15 times 2011 P/E

* Could be Indonesia's biggest state-owned IPO in 15 years
 

PT Krakatau Steel, Indonesia's
biggest steel maker, is set to raise up to 3.47 trillion rupiah
($388.6 million) in its initial public offering this November,
valuing the company at nearly $2 billion, two sources with
direct knowledge of the matter said on Monday.

The IPO, set to be the second biggest in Jakarta this year,
comes as the Indonesian government plans to ramp up its
offerings of stakes in state firms in 2011 to capitalise on
strong investor interest and a stock market JKSE at record
highs.

The Indonesian steel giant plans to sell shares equivalent
to roughly 20 percent of its enlarged share capital, and aims
to use the proceeds to expand its production capacity and
acquire land for its joint venture with South Korea's POSCO

Krakatau has set the price range for bookbuilding at
800-1,100 rupiah per share, said the sources, who were not
authorised to speak publicly about the matter and declined to
be identified.

The price range represents 11 to 15 times forward P/E, one
of the sources said.  "800 rupiah is a price that we hope to get while the 1,100
hope is like a dream price," the source said. "The pricing is a
big premium."

The valuation prices Krakatau at a premium to South Korea's
POSCO, the world's No.3 steel maker, which trades
at 8.8 times forward P/E.

If the IPO prices at the top end of the range, it will
become Indonesia's biggest IPO for a state-owned firm in 15
years.

A 1995 IPO by PT Telekomunikasi Indonesia (TLKM), the
country's biggest telecommunications firm, raised 5.01 trillion
rupiah.

The biggest Indonesian IPO this year was by the world's top
noodle maker PT Indofood CBP Sukses Makmur ICBP.JK, which
jumped as much as 15 percent on its trading debut earlier this
month after raising over 6.29 trillion rupiah.

Krakatau will sell 3.155 billion of B-class new shares on
Nov 2 to 4 and expects to do the initial debut on Nov 11.

Deutsche Bank (DBKGn) and Credit Suisse (CSGN) are
the deal's international underwriters. Source: Reuters