Temasek weighing bid for 51% stake in Jakarta bank

It is cautious about $700m investment because of concerns over general political climate in Indonesia: Sources

THE Singapore Government’s investment arm is exploring whether to make a bid for a 51 per cent stake worth nearly US$400 million (S$698.4 million) in Indonesia’s fifth-biggest bank, Bank Danamon.

So said a well-placed Indonesian source yesterday, adding: ‘Temasek Holdings is exploring the possibility of taking over Danamon.

‘It would like to know the conditions put forward by the Indonesian government and Ibra.’Ibra refers to the Indonesian Bank Restructuring Agency, which was set up to take over ailing banks and sell off their assets.

While Temasek yesterday confirmed that it has hired United States-based investment firm Goldman Sachs as a financial adviser, it has so far declined to say if the appointment is related to a bid for Bank Danamon.

The Indonesian source explained yesterday that Temasek is still in the exploratory stage because it has concerns about the general political climate in Indonesia.

In particular, there are concerns surrounding the recent purchase of a stake in Indonesia’s second-largest telecommunications operator, Indosat, and moves to undermine that deal.

In December last year, Temasek-controlled Singapore Technologies Telemedia (ST Telemedia) paid 5.6 trillion rupiah (S$1.18 billion) for a 42 per cent stake in Indosat, outbidding Telekom Malaysia. ST Telemedia sealed the transaction on Dec 24 when it paid in full for the acquisition.

But the deal has attracted criticism, not just from former president Abdurrahman Wahid but also from some Indonesian

MPs and politicians who alleged that it was done in a non-transparent manner.

‘The thinking is that the climate is not conducive to buying the assets of Ibra now. That is why Temasek is being cautious,’said the source.

Bank Danamon is being put up for sale by Ibra, which owns 99.36 per cent of it. Ibra plans to sell a 51 per cent controlling stake through a strategic sale and another 20 per cent through a market placement.

Temasek also declined to comment yesterday on whether DBS Group Holdings – South-east Asia’s largest bank – would be its vehicle for the Bank Danamon bid, as suggested by market sources.

Temasek’s director of corporate communications, Ms Eva Ho, said: ‘We do not wish to comment at this point on Bank Danamon. That is still just speculation.’

Just last month, analysts had told The Straits Times that it was unlikely DBS, which is partly owned by Temasek, would be keen on this particular transaction, having only recently wrapped up its multi-billion-dollar purchase of Hongkong’s Dao Heng Bank.

Ibra hopes to raise nearly US$400 million from the sale of its 51 per cent stake in Bank Danamon, and is seeking prospective buyers from Asia.

Other potential bidders include HSBC Bank and Malaysia’s largest banking group, Maybank, according to market sources. HSBC declined to comment yesterday, while a Maybank spokesman said the bank had no plans to bid for the Bank Danamon stake.

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