Japanese lender, MUFG Bank Ltd. releases 157 million shares of PT Bank Danamon Indonesia Tbk (IDX: BDMN) to fulfill the free float provisions, said the managing director today - Photo by the Company

JAKARTA (TheInsiderStories) – Indonesia’s Financial Service Agency (FSA) has granted approval for MUFG Bank Ltd., to increase its investment In PT Bank Danamon Tbk (IDX: BDMN), the Japan-based lender announced on July 31.

Takayoshi Futae, MUFG’s CEO for Asia & Oceania region said: “As one of the leading banks in Asia & Oceania, we have long recognize Indonesia’s role as one of the key drivers of the region’s development and have sought to establish a stronger presence in the country.”

He added, Bank Danamon’ acquisition would make a very welcome and strategic addition to the MUFG group as we press on with the lender’s regional strategy.

Based on the company’s statement, MUFG Bank stated to increase its investment in the local bank to 40.0 percent by acquiring (directly or indirectly) an additional 20.1 percent from Asia Financial (Indonesia) Pte. Ltd. (AFI) and other affiliated entities, as part of second Step of the proposed transaction outlined in its announcement on Dec. 26, 2017.

MUFG Bank plans to complete the acquisition of the additional 20.1 percent of the publicly listed bank’ shares as soon as practicable, subject to other closing conditions customary for a transaction of this nature.

Upon the completion of this acquisition, MUFG Bank will become a controlling shareholder with 40.0 percent, AFI with 33.8 percent and public 26.2 percent in shareholding interests in Bank Danamon.

Last year, Mitsubishi UFJ Financial Group, Inc.’s MUFG Bankhas entered into conditional share purchase agreements with AFI and other affiliated entities to acquire their shares in BDMN. AFI is a wholly-owned subsidiary of Singapore-based Fullerton Financial Holdings Pte. Ltd.

Before the announcement, the sellers hold in aggregate 73.8 percent share of the local bank. The strategic investment by MUFG Bank will be executed through three steps, and completion of the proposed transaction will result the Japanese bank becoming the largest shareholder in Bank Danamon.

It will also bolster MUFG Bank’s growth strategy in Asia and Oceania also contribute to the overall development of the Indonesian banking sector.

In the first step, MUFG will acquire an initial 19.9 percent stake in BDMN, based on a price of Rp8,323 per share (US$0.58) or in total Rp15.88 trillion. The price was based on a 3Q17 P/B of 2.0x with certain adjustments applied.

For second step, MUFG intends to then seek regulatory and other relevant approvals to acquire an additional 20.1 percent to increase its stake in BDMN to 40 percent. This step is expected to close between second quarter to third quarter of 2018, subject to receiving these approvals.

Last step upon completion of second step, MUFG Bank intends to seek the necessary approvals to increase their stake in Bank Danamon beyond the 40 percent. With the closing of all steps, MUFG Bank’s final stake in the bank is expected to be over 73.8 percent.

In Indonesia, MUFG Bank has been operating for 50 years and currently has a full services two branches in Jakarta and Surabaya, and nine service points across the country.

Indonesia is the largest economy in Southeast Asia underpinned by excellent growth fundamentals including favorable demographics, a rich resource base and stable political climate.

As Japan and Indonesia celebrate 60 years of diplomatic relations in 2018, this partnership is also a fitting and timely reminder of the deep ties that exist between both countries. “And we will leverage this alliance to further intermediate business flows between these two great nations and contribute to ASEAN’s economy,” he said.

Currently, MUFG Bank has invested in a 77 percent stake in Bank of Ayudhya Public Company Limited (Krungsri) in Thailand, 20 percent in VietinBank in Vietnam and 20 percent in Security Bank Corporation in the Philippines.

US$1: Rp14,300

Email: linda.silaen@theinsiderstories.com