Khazanah vying for more toll projects

After acquiring majority (55%) shares of Cikampek-Palimanan toll road project from a consortium led by Saratoga Investama, Malaysia's Khazanah through its subsidiary PLUS, is likely to acquire other toll projects in Java.

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Harry Tanoe tighten his grip on Bimantara

Harry Tanoesoedibjo has tighten his grop on PT Bimantara Citra Tbk with new shares bought to make his PT Bhakti Investama Tbk ownership at 42.2%, almost double the initial size of 24.97% when it entered the company in 2002. This week, Bhakti bought another 20 million shares of Bimantara at Rp1,300/share. Harry was considered a proxy to Mr Bambang Trihatmodjo, the former controlling owner. Bambang ownership at Bimantara has decreased from 22% to 13.08% accordingly.

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Indonesia banking consolidation

A decade ago, Indonesia had 240 banks. Financial crisis in 1998 had cut significantly the number to 131 banks at the moment. It was the crisis that forced the consolidation in the country’s banking industry. But with per capita income of below US$1,500, the number is way too big and it cost the country a huge inefficiency of banking operations.

Under Indonesia Banking Architecture (API) launched in 2004, entry to the market has been tightened with minimum capital of Rp3 trillion (US$335 million) to open a new bank. Besides, banks, including the banks established by regional administrations, should have minimum capital of Rp100 billion by 2010.

In June 2005, Bank Indonesia (the central bank) launched the banking consolidation policy to anticipate the implementation of Basel II Accord by 2008. Under the policy, banks should have minimum core capital of Rp100 billion (US$11 million) as of 2010 and a minimum of Rp80 billion by the end of 2007. Those who failed to meet the requirement will be punished with limited operation such as maximum amount of third party funds at 10 times of core capital and maximum loans of Rp500 million (US$550,000).

The central bank actually hoped for voluntary mergers before 2007. But there are only few voluntary mergers and acquisitions so far. Some small-medium banks have tried to raise capital through stock market, but the progress has been slow. The latest major merger was back in December 2004 when three banks (CIC, Danpac & Pikko) merged. Last year, two banks (Arta Graha & Inter Pacfic) merged and Sinar Mas reentered the banking business with the acquisition of small bank PT Bank Shinta. But overall, the consolidation has been too slow.

Currently total capital of 131 banks is Rp120.8 trillion or average of Rp916 billion. It seems bigger than the requirement of Rp100 billion. But the Top 20 banks contributed to most of the capital and leave others with big question mark. There are way too many banks that serve one or two customers only, sometimes related to the owners or related parties/families with core capital less than US$10 million.

According to financial report as of June 2006, the Top 20 banks has combined capital of Rp114 trillion which leaves another 111 banks with combined capital of only Rp6 trillion or average of Rp54 billion. Most foreign-owned banks in the country have core capital above Rp100 billion with Bank of America as the only exception, raising the question of its future in Indonesia.

Profitability is also a big issue in Indonesian banking industry. As of May 2006, total assets in Indonesian banking system is Rp1514 trillion (around US$165 billion) while total profit is Rp15 trillion, reflecting a return on asset (ROA) of 1%. But why these banks don’t want to merge?

Central Bank and bankers argues that banking consolidation needs tax incentives, the authority of government. But no such incentives provided.

Desperate on the bank’s owners to merge voluntarily and the slow progress in banking consolidation through capital requirement, Bank Indonesia then launch the single presence policy, which practically forbid a company or someone owns more than a bank. But the policy most likely would only consolidate big banks, not the small banks. For example, Temasek-related banks (Danamon, BII & DBS Indonesia), Khazanah (Bank Niaga & LippoBank), Panin Group (Panin & Victoria), Standard Chartered (Standard Chartered Indonesia & Bank Permata), or Rabobank (Rabobank Indonesia and two banks it acquired recently—Bank Haga and Hagakita, from Djarum Group which controls Bank Central Asia/BCA) and ANZ-ANZ Panin.

If the central bank fair enough to implement the policy, state-owned banks should be merged or consolidated as well. But in normal situation, it’s difficult to merge state-owned banks. Efforts to merge PT Bank Negara Indonesia (BNI) Tbk and PT Bank Tabungan Negara (BTN) collapsed last year on political maneuvers from the proponents and opponents.

Vice President Jusuf Kalla indirectly opposed the idea to merge state-owned banks arguing they have different functions in the economy. Strong resistance has always been at the state-owned banks themselves, especially workers and the management, something the government can’t just neglect.

This is great dilemma and political test for Indonesian government as neglecting the consolidation based on single presence policy would be discriminative and against the fair competition law.

Confronting such dilemma, Central Bank has softened its stance on single presence policy. Instead of forcing the owners to divest or merge the banks, they’re given option to establish a holding company to manage the banks.

Some banks have responded the move in different ways. Djarum Group, who owns the largest private bank PT Bank Central Asia (BCA) Tbk with Farallon Capital, for example, decided to sell two other banks (Haga & Hagakita) to Rabobank last month. But this had leave Rabobank with further question, whether it will merge its subsidiary with the two banks. Singapore’s OCBC has decided to merge OCBC with NISP.

Singapore’s Temasek is yet to decide the future of its banking ownership in Indonesia (Danamon, BII & DBS Indonesia). Malaysia’s Khazanah has repeatedly denies speculation about merger of its Indonesian banks (Niaga & Lippo). While market has speculated the possible offloading of Niaga and keeping LippoBank, Khazanah has option to merge Niaga & Lippo or establish a new holding. The same would apply to Stanchart or Rabobank.

How about the small local banks?

Some small-medium banks have entered the stock market to raise capital. There are some, which plans to float their shares in the coming months. But most of them are being the targets of acquisition by bigger groups. There are around 20 banks in this category. And we will see more mergers and acquisitions to come.

Further consolidation is subject to Central Bank’s firm decision to implement the architecture it drafted. Under the architecture, there will be three categories of banks operating in Indonesia. First is international bank, those with capital above Rp50 trillion (US$5.6 billion); second, national bank (capital from Rp10 trillion to Rp50 trillion); and focus bank (Rp100 billion to Rp10 trillion). None of the banks operated in Indonesia falls into the first category. A merger of state-owned banks could create one. And only three existing banks are eligible to get the national bank status with nation-wide operation.

Such categorization would consolidate further the banking industry and streamlining the operation of many banks which then boost average assets per customer in most banks and reduce significantly the banking operational costs. We will see more the merger of small-to-medium size banks to get the status as national banks.

Those who will be affected by single policy

Group Indonesian Banks

OCBC OCBC Indonesia
Bank NISP
UOB UOB Indonesia
Bank Buana
Khazanah Niaga
Lippo
Temasek Danamon
BII
DBS
Stanchart Stanchart Indonesia
Permata
Rabobank Rabobank Indonesia
Haga
Hagakita
Panin Panin Bank
ANZ Panin
State-owned banks Mandiri
BRI
BNI
BTN
BEI

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Bank Niaga asset grew 19.6%, profit up 15%

PT Bank Niaga Tbk, the listed subsidiary of Malaysia's Bumiputera-Commerce Holdings Berhad, booked net profit of Rp353 billion in first half 2006, an increase of 15% from the same period last year. Bad loans keeps increasing though.

According to the company's published financial statement today, Bank Niaga's total asset as of June 30, 2006 was Rp40.79 trillion (US$4.6 billion), 19.6% growth of Rp34.12 trillion in June 2005 mainly due to increasing time deposits. The bank, saved from bankruptcy with huge government bonds, disbursed more loans in H1 2006, especially rupiah denominated loans. But total loans in fifth category (loss) jumped from Rp100.85 billion in June 2005 to Rp728.8 billion in June 2006. In the special mention category, the amount also increased from Rp1.76 trillion to Rp2.66 trillion.
Bumiputera-Commerce owns 65.03% shares of Bank Niaga. Khazanah Nasional Berhad and Employee Provident Fund (EPV) have 20.95% and 17.04% shares respectively in Bumiputera-Commerce Holdings.

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Single presence policy delayed further

Indonesia's central bank decided to postpone the implementation of single presence policy to as early as 2008-2010, behind its initial schedule of second half 2006.

Under the single presence policy, someone or a company will not be allowed to own shares in two or more banks. Should the central bank implement the policy, companies like Singapore's Temasek Holdings, UOB, OCBC, Malaysia's Khazanah, Standard Chartered, and some local business groups should merge the banks or divest and exit.
Koran Tempo quoted Burhanuddin Abdullah, central bank governor saying there are three options available. First, the central bank will 'politely' ask bank owners to merge. Second, bank central will give direction to bank owners on what to do. Third, bank central will instruct bank owners to merge within two years starting 2008.
So, the central bank barks louder than its bite, as usual.

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Govt to offload Permata and BII shares

PT Perusahaan Pengelola Aset, a state-owned company established to manage the assets previously controlled by Indonesia Bank Restructuring Agency (IBRA), would offload the remaining shares in two listed banks, Permata and Bank Internasional Indonesia (BII), Tempointeraktif.com reported yesterday.

Raden Pardede, PPA vice president director, said the company had secured government approval early this month. Govt through PPA holds 26.16% shares in Bank Permata and 5.52% shares in BII. PPA is about to appoint financial advisor for the divestments scheduled in second semester.
PPA also has shares in six other banks, 5.04% of Bank Central Asia (BCA), 10.5% of Danamon, 5.25% of Niaga, 2.64% of Lippo Bank, 28% of BTPN, and 6% at May Bank. PPA plans to divest these shares until 2008.
Government controlled majority shares of these banks through a massive recapitalization program that cost tax payers Rp660 trillion (US$70 billion) during 1998-2001 period. Government started the divestment with BCA to Farallon & Djarum in 2001, followed by Niaga to Commerce Berhad (Malaysia), Danamon and BII to Temasek Holdings (Singapore), Permata to Standard Chartered (UK) and Lippo to Khazanah (Malaysia).

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Single presence to be implemented Q3

Central Bank governor Burhanuddin Abdullah confirmed the implementation of single presence policy in Indonesia to be started in third quarter this year in a bid to consolidate the banking sector, Investor Daily reported today.

Under the new policy, an individual or enterprise is not allowed to be the controlling shareholder or beneficiary owner in two or more banks. With that, some banks should merge if the controlling shareholders decides to maintain ownership or should sell the stakes to other parties.

For example, R. Budi Hartono (owner of Djarum Group, ranked second behind PT Gudang Garam Tbk owner Rahman Halim in Forbes rich list) is listed as controlling shareholder at PT Bank Central Asia (BCA) Tbk, PT Bank Haga, and PT Bank Hagakita. BCA is the largest listed private-owned bank in Indonesia where Farindo (a joint venture between Farallon Capital and Djarum Group) controls 51% shares. It's not clear which option Budi Hartono would take.

Bisnis Indonesia reported that some bank owners have responded the plan with merger plans. "There are some who plan to merge their banks," said Rusli Simanjuntak, director at Bank Indonesia. He didn't disclose the names though.

Some bank owners have previously pledged their support and plan to merge under the single presence policy. Panin Group, for example, is ready to merge PT Pan Indonesia Bank Tbk with PT ANZ Panin Bank. Singapore-based OCBC is also considering the merger of its last year acquired PT Bank NISP Tbk with Bank OCBC Indonesia. Another Singapore-based bank UOB would also merge PT Bank Buana Tbk with PT Bank UOB Indonesia.

Meanwhile Temasek Holdings, the beneficiary owner of three banks in Idonesia---PT Bank Danamon Tbk, PT Bank International Indonesia, and PT Bank DBS Indonesia---is yet to respond the possible merger.

Standard Chartered Bank, the owner of wholly owned subsidiary PT Standard Chartered Bank and 31.55% shares in PT Bank Permata, is similar to Temasek. No respond. Malaysia's Khazanah National Berhad, beneficiary owner of Bank Lippo and Bank Niaga, is also tight-lipped on the issue.

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Opposition to Astro Network heats up

State minister for communication and information Sofyan Djalil has the bussiest days in office in the last few months dealing with public pressures. First on the massive protest on the plan to publish Indonesian edition of Playboy. And then the implementation of new regulations on airwaves and broadcasting which are considered threatening the press freedom.
In the last few days, the ministry have to deal with the pressure to close down the broadcasting license of Global TV, a network previously owned by an Islamic organization for educational purpose but later on sold to PT Bimantara Citra Tbk with completely different programs, mainly entertainments.
Almost at the same time, pressure mounts on direct to home (DTH) service of Astro All Asia Network Plc subsidiary. Today, deputy coordinator for working group on information and communication at The House (DPR) Commission I Dedy Djamaluddin Malik urge government to put on hold Astro's services until the company abide the Broadcasting Law and the regulation on communication satellite.
DPR is scheduled to summon the minister for communication, Astro management, and former director general for post and telecommunication Djamhari Sirat.
DPR believes there are two pending issues that should be settled before the Malaysian giant start to deliver services to Indonesian customers.
First on the regulation foreign ownership in broadcasting which set the limits of maximum 20% foreign shares. Astro All Asia Networks Plc and Lippo Group of Indonesia entered into a joint venture company to provide multi-channel satellite pay-TV and multimedia services in Indonesia in March 2005.
The joint-venture company, PT Astro Nusantara, have an initial paid-up capital of US$30 million, of which ASTRO hold an effective 51% share with the balance held by PT Broadband Multimedia Tbk of the Lippo Group. ASTRO also provides shareholder loans of US$35 million repayable on the third and fourth anniversary of the loan drawdown.
Peak funding is estimated at US$200 million after four years of operations and the additional funding of US$135 milion is expected to be raised through a combination of third party loans, and equity and quasi-equity instruments.
"Astro holds 51% in Direct Vision. This is a violation to the Broadcasting Law No. 32/2002," Malik said.
ASTRO listed on Bursa Malaysia in October 2003. Major shareholders of the Group include the Usaha Tegas Group (42.7%) and Khazanah Nasional Berhad (21.6%), the investment arm of the Malaysian Government.
Second, the issue of landing rights. Parliament believes Astro violates the regulation on landing rights as no reciprocal agrement between Malaysia and Indonesia on satellite communication services.
Whatever the verdict will be, Indonesia as the most populous country in South East Asia clearly a potential market. With only 1% of its population subscribes pay TV services, Indonesia indeed one of the most attractive market for companies like Astro.

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Half-hearted on Excelcomindo

After months of critics on the initial public offering (IPO) of the third largest cellular company PT Excelcomindo Pratama Tbk, its major shareholder (Telekom Malaysia) finally pledged to float more shares to public investors.

Jakarta Stock Exchange (JSX) president director Erry Firmansyah told the press today that Telekom Malaysia sent a letter on Wednesday (January 11) to float 100 million Excelcomindo shares pending on market's apetite to absorb.

The 100 million shares equals to 0.014% from Excelcomindo's total shares of 7.137 billion and that would make the total floating shares of 0.07%.

As of December 31, 2005, Telekom Malaysia through its wholly-owned subsidiary Indocel Holdings controls 56.92% shares of Excelcomindo, followed by Khazanah Nasional Berhad (Malaysia government's investment arm) at 16.81%, PT Telekomindo Primabhakti 15.97%, and Asia Infrastructure Fund 10.14%.

Excelcomindo entered the stock market through public offering of 1.427 billion shares or 20% of its total outstanding shares on September 29, 2005. Just days after the listing, the number of shares owned by public investors dropped significantly to 0.16%.

For sure Excelcomindo is not the only listed company with such low percentage of floating shares as a result of half-hearted efforts from the stock market authorities. They're just focus on whether such companies already met the technical regulations, but they missed the whole idea of stock market as an economic democratization tool.

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Temasek exercise the merger of Indonesian banks

Temasek Holdings is reportedly exercising the merger of two of its subsidiary banks in Indonesia, the Bank International Indonesia (BII) and Bank Danamon, ahead of Central Bank's plan to implement single presence policy sometime next year. The policy would ban cross-ownerships in banks.
Investor Daily reported today that Temasek is preparing the plan to merge BII and Danamon. "Discussions are underway, but they are purely for internal purpose," said a source to the newspaper.

Temasek controls 59% of Danamon and 31% of BII. The merger of BII and Danamon would create a bank with total assets of Rp110 trillion (US$11 billion) and ranked fifth in the country behind Bank Mandiri, Bank Central Asia, Bank Negara Indonesia (BNI), and Bank Rakyat Indonesia (BRI). Temasek has another subsidiary PT Bank DBS Indonesia. A three-way merger of BII-Danamon-DBS would create a bigger bank than BRI.

Other shareholder that might be forced to merge their banks is Khazanah Nasional Berhad, Malaysia. The company has shareholdings in Bank Niaga (indirectly through Commerce Asset Berhad) and Bank Lippo (through Santubong Investment).
Standard Chartered (UK) might also have to merge its recently acquired Bank Permata with Standard Chartered Indonesia.
Djarum Group should merge BCA (Djarum is the co-owner of Farindo Investment which controls 51% shares) with two banks, Bank Haga and Hagakita, controlled by founding family of Djarum Group. Panin Group also has cross-ownership in Bank Panin and Victoria.
While it is positive to consolidate the banking industry, opposition may come from minority shareholders, especially for publicly-listed banks. Besides, there is controversy surrounding the state-owned banks. If the policy should be implemented accross-the-board, government should merge five state-owned banks (Mandiri, BNI, BRI, BTN, and BEI) with most likely huge political shakeups.

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Single Presence Policy

As I mentioned in the previous article, Indonesia has too many banks and desperately needs a consolidation through merger and acquisitions. But I am afraid the Central Bank's plan to enforce a single presence ownership policy wouldn't do any help to force the consolidation and then improve local banks.

Today, newspapers quoted Bank Indonesia deputy governor Siti C. Fadjrijah saying the single presence policy is actually intended to be implemented on private banks, which are considered to be too numerous.
I've done extensive research on banks ownership in the country. I found that only two privately-owned local banks (Haga and Hagakita) have the same shareholders. Most of these medium to low size banks owned by hundreds of different shareholders. A single presence wouldn't work in that sense.

Government of Indonesia owns controlling shares in five banks (Mandiri, BNI, BRI, BTN, and BEI). I doubt the central bank could enforce single presence policy on these banks. Look at how difficult to merge even two state-owned banks BNI and BTN only to get the president's decision to drop the plan.

Fadjrijah seems to confirm that by saying state-owned banks may be exempted from the single presence policy. "For the state-owned banks, from what I know, there is a plan to release all (the government's ownership) in them, apart from several banks. So the government will in the end own two or three banks," she said.

Again, I am afraid this not the case for the government. Minister of State-Owned Enterprises Sugiharto once supported the BNI-BTN merger plan, but president SBY decided to stop it. Sugiharto also rejects any plan to divest more government shares in several banks.

Foreign banks and investors ultimately would be the prime target of this single presence policy. Standard Chartered, for example, might have to merge with Bank Permata (31% shares) even though it is not easy, as Astra International also owns 31% shares of Permata.
Singapore-based United Overseas Bank (UOB) might also have to merge its Indonesian wholly owned subsidiary (UOB Indonesia) with the recently acquired Bank Buana (53%) or OCBC Indonesia should merge with Bank NISP (70,66%). UOB and OCBC are Singapore-based banks.
Temasek Holdings, Singapore government's investment company, owns shares in three banks, directly or indirectly. (Remember that Central Bank Rule No.5/25/2003 stated the bank's ultimate shareholders/beneficiary owners are those who control directly more than 25% shares or in combination with others).
The Temasek-linked banks are DBS Indonesia, Danamon (through Asia Financial Holdings), and BII (through Sorak Financial, a joint venture with South Korean Kookmin Bank).
Malaysia's Khazanah Berhad also owns directly 52,05% of Bank Lippo through Santubong Investment and indirectly control Bank Niaga (through Commerce Asset Berhad in which Khazanah owns 25%).
In reality, I should say, it is not easy and potentially face legal battles. Today central bank officers admitted the single presence policy was still in its early stages of discussion and need a lot of reviews. But Central Bank believe the policy would help minimize the potential for fraudulent banking practices. There were many cases in the past where those owning more than one bank used these banks to shift funds around for the purpose of covering up irregularities in their bookkeeping, the Central Bank argued.

Well, it was particularly true to state-owned banks. Look at the amount of recapitalization bonds issued to bailout the state-owned banks in 1998-1999. So, I don't understand why state-owned banks should be exempted if the reasoning behind the single presence policy is too minimize fraudulent banking practices.

OK. Let say that Bank Indonesia will go ahead with the plan. Most likely the single presence policy would only consolidate the foreign-owned banks. They will be bigger and stronger. Imagine a merger of Danamon, BII, and DBS or Standard Chartered-Permata, UOB-Buana, OCBC-NISP, and Lippo-Niaga. They would pose a bigger threat to state-owned banks and make life even more miserable for local-owned medium or smaller banks.
An analyst, meanwhile, told me other possibility that stand-alone banks like BCA and the state banks might get better opportunity to takeover the remaining local banks. But I am afraid the chance is slim for this to happen.
I prefer an acceleration of minimum capital requirement as arranged in Indonesian Banking Architecture (API). The timing is just perfect when banks are struggling to deal with high inflation and narrow interest margin. It would be difficult for these banks to grow the capital from accumulated profits. The room for sub-debt issuance to raise capital adequacy ratio (CAR) is also limited.

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Banks forced to merge

For a country with per capita income of US$1,000 something, Indonesia ultimately has too many banks. We have 131 banks with total asset of US$130 billion. On average, it looks good with US$1 billion assets per bank. With total equity of US$10 billion, average equity is less than US$80 million.

But almost half of Indonesian bank assets are in terms of government bonds issued to recapitalize the almost-bankrupt-banks during 1998-1999 financial crisis. We, the taxpayers, support these banks. Without our tax, these banks would have collapsed. So, if you happen to be a banker or owner of these banks, better say thanks to the generous Indonesian people.

They sacrificed with higher fuel price (as government scrap the subsidy), but the state keep subsidize these banks through interest payment of government bonds. And Indonesian people (taxpayers) never default on their payments through State Budget.

But I don't want to write about that, this time. We're discussing the recent statement by Siti Ch Fadjrijah, deputy governor of Bank Indonesia (central bank). The lady said banks would be forced to merge through a new policy called single presence. The new rule will be implemented sometimes mid-2006.

What is single presence?

Well, if you are the owner (ultimate owner) of two or more banks in Indonesia, you should merge them. Such policy, the bank central argues, had been implemented in Thailand, Malaysia, and India.

Bisnis Indonesia put some banks with same owner like Bank Haga & Hagakita, Bank Danamon & Bank International Indonesia (BII), Bank Niaga & Lippo. Singapore's Temasek Holdings owned Danamon and BII, while Khazanah owned Niaga & Lippo.

Indonesian government owned all the state banks like Bank Mandiri, BNI, BRI, BTN, and BEI. I am not sure if central bank could force government to merge all these banks. Remember the cracks in cabinet recently on the proposed BNI-BTN merger?

Surprisingly, when journalists asked Fajdrijah about Danamon & BII, she said, "correct me if I'm wrong, both banks owned by two different companies. We have to look at that first."

What?

Go to Temasekholdings.com.sg and we will find Temasek owns 56% shares of Danamon and 35% of BII. On top of that Temasek owns 28% shares of DBS with operation in Indonesia as well.

How about Malaysia's Khazanah Nasional Berhad? Khazanah has 100% Santubong Investments BV which acquired controlling shares of Bank Lippo. The Malaysian government investment arm also has 25.95% shares of Commerce Asset which control Bank Niaga.

The problem with Bank Indonesia's plan is definition on who should be considered ultimate owner of the banks. As for us, the taxpayers, the least Bank Indonesia can do is to make these banks more efficient and prevent lousy investors to control the bank like in the past.

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Bakrie family to regain control over BTPN?

Bisnis Indonesia reported today that investment bank PT Renaissance Capital is searching for funding to acquire 71.6% shares of PT Bank Tabungan Pensiunan Nasional (BTPN), a bank previously controlled by Bakrie Family (who controls PT Bakrie & Brothers Tbk) with key figure Aburizal Bakrie (chief economic minister).
The acquisition value is predicted to reach US$90.3 million or 1.75 times of the bank's book value as of May 2001 at US$72.1 million.
As reported earlier by IFR Asia, Bakrie Family might be the real investor behind Renaissance. But Bakrie Family and Renaissance gave no confirmation on the rumor. BTPN was controlled by Bakrie Family before Indonesia Bank Restructuring Agency (IBRA) restructured the bank after the collapse of banking sector in 1998-1999.
PT Perusahaan Pengelola Aset (PPA), the company established to manage remaining assets under IBRA, hold 28.39% shares in BTPN, while Bakrie Capital owns 10%, Rifan Financindo 22.61%, and Mr Fuad Mansur 20%. It is not clear though whose shares Renaissance is planning to acquire. Besides, Rifan is known for its close relationship with Bakrie Group.
Credit Suisse First Boston (CSFB) is reportedly been appointed by investor to raise the funds to acquire BTPN. PPA initially approved a plan to raise BTPN's capital through initial public offering (IPO) but then back it off because the company is afraid of share dillution.
Early this week, media reported that Malaysian and Singaporean investors are vying for a majority stake in BTPN. Malaysian investors are state-investment company Khazanah Nasional Bhd and ICB Financial Group, while the Singaporean investor is Overseas-Chinese Banking Corp. But both Khazanah and ICB denied the report yesterday.
Khazanah is just completed the acquisition of 52% shares in PT Bank Lippo Tbk, while ICB is preparing a rights issue to increase capital at its subsidiary PT Bank Bumiputera Tbk.
If Bakrie really is behind Renaissance, it would be a silent comeback for the family after losing control over PT Bank Nusa Nasional (one of banks that merged into Bank Danamon). It is not clear whether Bank Indonesia would allow the family to regain control over the bank considering their track record.
Renaissance is a company established by three former partners at accounting firm Delloite Tohmatsu. They are Samin Tan, Suryadinata, and Dessi Natalegawa. The company is also financial advisor for PT Kiani Kertas, a company controlled by retired general Prabowo Subianto.

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Malaysia’s year of acquisitions!

I should say this year is Malaysia’s year in Indonesia’s investment, just like 2003 and 2004 for Singapore. A lot of acquisitions with totally different reaction from Indonesian.

Singapore investors were facing intense opposition and criticism, sometimes out of proportion nationalism sentiment during major acquisitions by Temasek on Indosat, Bank Danamon, and Bank International Indonesia (BII). That’s not the case with Malaysia’s acquisitions, at least in the last 12 months.
Last week, Santubong Investments BV, a wholly-owned subsidiary of Khazanah Nasional Berhad, completed its proposed acquisition of a 52.05% equity stake in PT Bank Lippo Tbk from Swissasia Global for approximately US$330 million.
Santubong is also planning to make a tender offer for the remaining shares in Lippo Bank it does not own. Lippo Bank is one of the largest private banks in Indonesia initially controlled by Riyadi Family who owns Lippo Group.
Khazanah is the third Malaysian investor to acquire Indonesian banks after the 1997 financial crisis. Commerce Berhad was the first major investor when it acquired Bank Niaga (2003) followed by ICB Group which controlled Bank Bumiputera since last year. ICB is in the process to raise the capital of its Indonesian subsidiary through rights issue sometimes next month.
Khazanah’s name also tipped in the possible acquisition of 71% shares of smaller size PT Bank Tabungan Pensiunan Nasional (BTPN) worth US$90 million. Yesterday, Khazanah denied the report, but people close to PT Perusahaan Pengelola Aset (PPA) said Khazanah is one of investors that expressed interest to acquire PPA’s 28% shares in BTPN.
Late September, Khazanah, the investment holding arm of Malaysian government, subscribed to a 16.8% stake in PT Excelcomindo Pratama for a total cash consideration of approximately US$234 million.
Excelcomindo is the third largest cellular telecommunication provider. Telkom Malaysia, where Khazanah has 40.64% shares, acquired 27% shares of Excelcomindo early this year leaving the founder PT Telekomindo Primabhakti (subsidiary of Rajawali Group led by Peter Sondakh) with the remaining 47.92% and Asia Infrastructure Fund (AIF) with 10%.
With the latest move, Malaysian control 41.8% shares of Excelcomindo, almost the same size with Temasek’s control over Indosat (formerly a state-owned telecommunication company and the second largest in the market).
Khazanah also has indirect investment in Indonesian telecommunication and multimedia market through Astro All Asia Networks where it has 21.52% shares. Early this year, Astro established a joint venture with Lippo Group to develop pay TV business. The new joint venture will invest US$1 billion in Indonesia in the next few years.
Early January, Malaysian telecommunication giant Maxis Communication had acquired a 51% shares of another Lippo subsidiary PT Natrindo Telepon Seluer for US$100 million and announced its plan to turn around the loss-making cellular operator by as early as 2010.
Right before entering the new year, Malaysian YTL Corporation Berhad fired the investment market with its surprise acquisition of 35% stakes in PT Jawa Power for US$139 million. PT Jawa Power is an independent power plant producing 1,200 MW of electricity. Siemens and Powergen are other major shareholders. I bet, a lot more Malaysian investment to come.

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