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StanChart, PT Astra selling stake in Bank Permata to Bangkok Bank
STANDARD Chartered and PT Astra International Tbk are selling their 44.56 per cent stake each in Indonesia's Bank Permata to Bangkok Bank for approximately US$2.6 billion in an all-cash deal.
Completion of the deal is subject to approval by Bangkok Bank's shareholders and regulatory nods in Indonesia and Thailand, expected to happen by the end of 2020.
The purchase price of US$2.6 billion is 1.77 times multiple of Bank Permata's book value, according to the Indonesian lender's most recent financial results.
Based on Bank Permata's book value on Sept 30 2019, the total consideration would be approximately US$2.6 billion, equivalent to a price of IDR1,498 per Permata share.
Bangkok Bank is said to have a keen interest to expand its presence in Indonesia. It intends to leverage on its strengths in corporate and SME banking to enhance Bank Permata's capabilities in trade finance, supply chain finance and joint syndications.
It is Thailand's largest bank by total shareholder equity, with a capital base in excess of US$14 billion, and with a Common Equity Tier 1 capital ratio of approximately 17.7 per cent.
Bill Winters, group chief executive of StanChart, said that the sale of its stake in Bank Permata will allow it to focus on its wholly-owned business in the Indonesian market, which he described as "large and strategically important".
He added that this move will release capital for reinvestment or return to shareholders.
Prijono Sugiarto, president director of Astra, said: "Our decision on Bank Permata takes into consideration its improved performance, the positive prospects for Indonesia's financial services industry and our strategy to focus on strengthening our existing position as a retail financial services provider in Indonesia."
Existing business relationships between Astra Group and Bank Permata will "continue as usual" and that they will carry on exploring new areas of cooperation, he added.
JPMorgan acted as financial adviser to Astra and StanChart.
In February this year, StanChart said that its Permata investment was no longer considered core and named Indonesia among four countries where the bank is focused on reducing costs, indicating that it was open to selling its stake.
DBS, OCBC and Japan's Sumitomo Mitsui Financial Group were all reported to have been vying to buy Bank Permata. The Indonesian lender's owners were said to be seeking a valuation of more than 1.6 times its book value.
Considered a mid-sized lender, Bank Permata operates over 300 branches in more than 60 cities in South-east Asia's biggest economy. Indonesia's banking sector, believed to be ripe for consolidation, has more than 100 lenders.
OCBC reportedly backed out of a bid after conducting due diligence as it concluded that Bank Permata was not a match.
The decision not to throw in a bid was deemed positive by Citi analyst Robert Kong. This comes as a merger and acquisition (M&A) in Indonesia would face "significant challenges", he said in a client note.
Managing a mid-sized bank in a market dominated by the top four would be difficult, he pointed out.
In addition, it would mean a "multi-year rationalisation process" to manage network duplication and to squeeze out cost savings, he noted. Brick-and-mortar M&As would also conflict with Singapore lenders' strategy of building digital banks to capture opportunities in Asean, added Mr Kong.