Bangkok Bank acquires majority stake in Bank Permata for $2.3b

• May 23, 2020

Bangkok Bank has acquired an 89.12 percent stake in privately owned Bank Permata from diversified conglomerate PT Astra International and British lender Standard Chartered Bank (SCB).

The Thailand-based bank completed on Wednesday the transaction for Rp 33.66 trillion (US$2.3 billion), equal to 1.63 times Bank Permata’s book value, as agreed by the sellers and buyers in March, Bangkok Bank said in a statement.

Following the acquisition, Bangkok Bank will apply to the Financial Services Authority (OJK) for approval to conduct a mandatory tender offer for the remaining 10.88 percent stake in Bank Permata. It will also merge its Indonesian branches with Bank Permata’s.

“[Bank] Permata will give Bangkok Bank a stronger presence in Southeast Asia’s two largest economies, reinforcing our position as a leading ASEAN bank,” Bangkok Bank president director Chartsiri Sophonpanich said in the statement.

He added that the bank would support Bank Permata to grow its retail, small and medium enterprise (SME) and corporate businesses, while also enhancing its customers’ access to growth opportunities in Indonesia.  

Back in March, both Astra and Standard Chartered agreed to lower Bank Permata’s purchase price from 1.77 times the book value to 1.63 times. The decision to lower the purchase price was made in light of the unfavorable economic conditions caused by the COVID-19 pandemic.

“Both the sellers [Astra and Standard Chartered] and the buyer [Bangkok Bank] agreed to the incentive to complete the transaction, as well as to provide a sense of certainty to the market during this uncertain time,” Astra investor relations head Tira Ardianti told The Jakarta Post on April 22.

Despite the lower price, Koneksi Kapital equity analyst Alfred Nainggolan said on Friday that it was a good time for investors to participate in Bank Permata’s tender offer, as its share price was deemed to be at a “premium level” compared to its peers.

Bank Permata’s price-to-book value (PBV) currently stands at around 1.5 times. The figure is well above other big-asset banks like privately owned Bank CIMB Niaga, which has a PBV of 0.4 times, Bank OCBC NISP (0.6 times) and state-owned Bank Mandiri (0.9 times).

Bangkok Bank emerged as the buyer in December 2019 when it signed a conditional sales and purchase agreement (CSPA) with Astra and Standard Chartered to acquire their stakes, 44.56 percent each, in Bank Permata.

The announcement shocked market players as Bangkok Bank was never rumored to want to take over Bank Permata after Standard Chartered announced in February 2019 that its investment in the bank was no longer a priority, signaling its willingness to sell its stake.

“[Bank] Permata’s team has done a tremendous job and we believe the business’s long-term potential remains strong, but it was no longer core to our strategy in Indonesia, which will now focus on our wholly owned branch business,” Standard Chartered Group chief executive Bill Winters said in the statement.

Astra, meanwhile, will continue to focus on growing its retail finance business following its divestment from Bank Permata, as the publicly listed firm remained positive about Indonesia’s financial service sector, Astra president director Prijono Sugiarto said in the statement.

Although the divestment could affect Astra’s profit, Alfred of Koneksi Kapital said the impact would be insignificant, as Bank Permata only contributed around 10 percent to its bottom line.

“The divestment is good for Astra as the transaction strengthens the company’s cash position,” he added.  

Astra stocks, traded on the Indonesia Stock Exchange (IDX) with the code ASII, climbed 0.51 percent on Friday while Bank Permata (BNLI) stocks jumped 1.19 percent versus a 0.06 percent decline recorded by the main gauge, the Jakarta Composite Index JCI).

“We believe Bangkok Bank will provide the best support for us in becoming a stronger player in the Indonesian banking landscape,” Bank Permata president director Ridha DM Wirakusumah said. “We will continue to grow our business as the bank of choice for all our stakeholders and further strengthen our capabilities in developing our retail, wholesale and sharia businesses.”

Source: https://www.thejakartapost.com/news/2020/05/22/bangkok-bank-acquires-majority-stake-in-bank-permata-for-2-3b.html