Government-owned Krakatau Steel did quite well in its IPO earlier this month, but now many are calling for an investigation into allegations the success was tainted by insider trading. The initial price was set too low to benefit certain well-connected investors, according to rumors.

The company’s stock rocketed 49% from Rp 850 (US$0.09) to Rp 1,270 ($0.14) in its first day, reaching the maximum gain and triggering an automatic block which stopped the price rising further. 3.2 billion shares were sold for Rp 2.7 trillion ($300 million), making it the biggest IPO of a state-owned company by value since 2006.

Even some Indonesian lawmakers have supported calls for an investigation by the government’s Supreme Audit Agency, including Coordinating Minister for the Economy Hatta Rajasa. The IPO’s underwriters deny any influence by outside factors, saying the offer price reflected earning ratios of comparable companies.

Update: In related news, Krakatau is claiming 30 business journalists attempted to reserve 1,500 shares in exchange for positive coverage of the IPO. The Indonesia Stock Exchange Journalist Forum has denied the allegations.

source & article: Channel NewsAsia