Indonesian lender BRI Agro sets aside $70m to acquire two smaller banks

Photo: REUTERS/Garry Lotulung

Publicly listed lender BRI Agro announced that it has set aside Rp 1 trillion ($70 million) to acquire two unnamed small banks as part of a strategy to accelerate its growth, Kontan reports.

“There are candidates that we are targeting. At the moment, we are racing against other banks. The target is buku I or buku II banks,” said BRI Agro executive director Agus Noorsanto in a public expose event on Wednesday.

Buku I and Buku II are two of four categories which banks in Indonesia are divided into according to their core capital. BUKU I is the lowest category and lists banks with core capital below Rp 1 trillion, followed by BUKU II with core capital between Rp 1 trillion and Rp 5 trillion.

Bank Agro itself is currently categorized as a Buku II bank with a core capital of Rp 3.1 trillion.

Agus confirmed that the bank’s parent company, state-owned lender Bank Rakyat Indonesia (BRI), has issued an instruction for the acquisition of two banks to be carried out.

However, he said that BRI Agro will acquire only one bank this year, with the other acquisition to take place next year.

BRI Agro is looking at investing almost Rp 600 billion for the first acquisition. The lenders involved are currently engaged in talks regarding the deal, and have yet to report to OJK about the planned move, Agus said.

Bank Agro will continue to focus on agribusiness sector as it expects its network and customer base to expand following the acquisition.

The bank raised the funds (Rp 1 trillion) for the acquisitions through a rights issue scheme, Agus added, from which the bank also managed to add around Rp 1.9 trillion to its core capital.

“With this addition in capital, our core capital will rise to Rp 5 trillion and we will be upgraded to Buku III,” he said.

Earlier this week, local lender Bank Agris announced that it’s majority stake will be acquired by Industrial Bank of Korea, which is also mulling an acquisition of another Indonesian bank before the end of this year.

Indonesian financial authorities are trying to trim the number of some 110 local banks and are open to mergers and acquisition of banks that enable consolidation in the sector.

Also Read:

Indonesia Bank Permata plans $404m rights issue in June

Industrial Bank of Korea to acquire 87.34% of Indonesia’s Bank Agris

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.