Indonesia’s Bank Mandiri Conducts Due Dilligence to Acquire Bank Permata

(Left to Right) Deputy for Minister of SOEs Gatot Trihargo, CEO of Mandiri Sekuritas Silvano Rumantir and CEO of Bank Mandiri Kartika Wirjoatmodjo
JAKARTA (TheInsiderStories) – Indonesian state-owned lender, PT Bank Mandiri Tbk (IDX: BMRI) finally confirmed that it plans to acquire PT Bank Permata Tbk (IDX: BNLI). CEO of the bank Kartika Wirjoatmodjo admitted, currently his party is conducting due diligence regarding the acquisition of Bank Permata.
“We are in the negotiation process with both of Bank Permata owners, Standard Chartered and PT Astra International Tbk (IDX: ASII), if it is suitable, we will acquire Bank Permata,” he told reporters in Jakarta, on Tuesday (4/9).
But he could not provide a detailed explanation of the valuation in the acquisition process. It is also at the same time to refute rumors that report valuation of the acquisition of Bank Permata.
Wirjoatmodjo revealed that his party had communicated with the Financial Service Authority and the State Own ministry eegarding the acquisition. This communication is also conducted to anticipate the ownership status Bank Mandiri in Bank Permata, which also has two banks, namely PT Bank Syariah Mandiri and PT Bank Mantap.
“Bank Mandiri does have two bank subsidiaries, it is impossible to have three banks, so it will be merged,” he said.
But he has not been able to explain in detail about this ownership status because it is still in the due diligence stage.
Regarding funding, Wirjoatmodjo said that it had sufficient funds to acquire Bank Permata. However, this is still determined by the negotiations carried out.
In addition to acquiring the medium lender, Bank Mandiri also issued a $750 million global bond this year. The global bond is lower than the initial estimate of $1 billion.
This funding is also to finance Bank Mandiri‘ credit expansion this year. As for the quarter I-2019, the state bank has booked 12 percent loan growth from various sectors such as commodities, manufacturing, property, oil and gas and other sectors.
While in the first quarter of 2018, the company’s loan reached Rp614.6 trillion or grew 5.05 percent, compared to loan in the first quarter of 2017 worth Rp 585 trillion.
PT RHB Sekuritas in its latest research on Feb. 27, assumed the statement of the Biritish lender’ showed a signal of selling about 44.56 percent the ownership in Bank Permata.
The securities house also noted, there is a possibility of another shareholder which is Astra International might also be open to the possibility of selling its shares of 44.5 percent in Bank Permata, especially post its decision to buy back 25 percent stake of its unit’ PT Astra Sedaya Finance from the bank in 2018.
Similarly, it would take a long time as well for Astra International to break even its investment in Bank Permata, which represents an opportunity cost.
“We view Astra as having more synergy with its multifinance subsidiaries than Permata to support its auto business,” the report said.
RHB Sekuritas also sees other potential buyers from Japanese or state-owned banks. Two of the recent notable merger and acquisitions in Indonesia came from Japanese banks Sumitomo Mitsui Banking Corp. in PT Bank Tabungan Pensiunan Nasional Tbk (IDX: BTPN) and MUFG Bank Ltd. in PT Bank Danamon Tbk (IDX: BDMN).
Mizuho was also been looking to purchase Australian ANZ’ stake in PT Bank Panin Tbk (IDX: PNBN) during 2013-2015, but was subsequently cancelled according. With Bank Panin having similar characteristics as Bank Permata this would make it an ideal candidate for Mizuho.
US$1: Rp14,100
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