Indonesia’s public-listed lender PT Bank Amar Tbk is in the advanced stages of talks to raise $80-100 million in a potential strategic partnership deal, according to two sources directly familiar with the development.
The deal is expected to be finalised soon, the people mentioned above said.
When contacted by DealStreetAsia for comments on the fundraising, Bank Amar president director Vishal Tulsian said, “We’re unable to confirm any ongoing discussion.”
Indonesia has seen a flurry of similar deals in Indonesia’s banking sector space, driven by well-capitalised tech players, such as the Indonesian super app Gojek’s stake acquisition of listed lender Bank Jago. Subsequently, in February this year, Bank Jago also secured an investment of $222 million from Singapore’s sovereign wealth fund GIC through a rights issue offering.
Other recent deals in the banking sector include Ant Group-backed fintech Akulaku acquiring a 25% stake in Bank Yudha Bhakti (now Bank Neo Commerce) in September 2020 and Sea Group buying out Bank Kesejahteraan Ekonomi (BKE).
The Bank Amar deal too will be modeled on similar lines allowing both parties to explore synergies in the financial services play, said one of the sources mentioned above.
Bank Amar’s proposed fundraising, when completed, will enable the lender to meet the minimum core capital requirement of $210 million by 2022. Bank Amar’s core capital is at Rp 1.03 trillion ($70.9 million) as of September 2020.
According to Indonesia’s financial services authority (OJK) regulation, released last March, banks are required to maintain a core capital of Rp3 trillion ($182.09 million) by 2022, starting at Rp1 trillion in 2020.
Currently, Bank Amar operates two main businesses, the digital lending platform Tunaiku and the digital banking app Senyumku. Tunaiku was set up back in 2014 while Senyumku was launched in August 2020 in partnership with Google.
Prior to the formation of Bank Amar, Singapore-headquartered Tolaram Fintech group became the controlling shareholder of Tunaiku and acquired Surabaya-based small-asset lender Bank Amin. The two entities merged to launch PT Bank Amar Indonesia.
In January 2020, Bank Amar made its stock market debut on the Indonesian Stock Exchanged offering 1.2 billion shares. Tolaram Group controls 30% of shares in the bank while the rest is held by the public.
In the first quarter of 2020, the lender secured regulatory approvals for digital banking and online KYC (Know Your Customer).
“We are offering our banking solutions purely digitally via the cloud, unlike the subsidiaries of traditional big banks that are now operating through digital channels,” Tulsian said, about its digital banking app.
Bank Amar is among the banks gearing up to transform the severely underbanked nation’s financial landscape. Indonesia has one of the largest unbanked populations globally – about 95 million adults, or 52% of adults in the country, are unbanked, and 47 million are underbanked, according to World Bank Data.
With the proposed fundraise, Bank Amar is targeting to grow its SME loan book in the next few years. To date, Tulsian claimed that Tunaiku has disbursed loans worth over $410 million to over 400,000 customers, of which more than 100,000 borrowers were MSMEs.
He stated the lender had reached profitability within two years of operations. According to its financial statement, dated September 2020, the lender booked a net income of Rp 25.57 billion ($1.76 million), down 59.31% from Rp 62.85 billion ($4.3 million) in the corresponding period of the previous year. The fall in net income was on account of an increase in operational expenses and impairment loss.