Indonesian state-owned lender Bank Rakyat Indonesia (BRI) is planning to raise its stake in venture capital firm Bahana Artha Ventura to a majority control of around 65 percent, as part of its plan to roll out its own VC arm.
“The first step is done. We already have 35 per cent stake. We are processing the second step to raise it to a majority stake of around 65%. We’re still in the negotiation stage. It should be finalized this year,” BRI finance director Haru Koesmahhargyo told DEALSTREETASIA.
The initial 35 per cent stake in Bahana was acquired by BRI late last year for a reported Rp 71 billion. Haru said both parties have yet to agree on the price of the additional stake, but suggested that the figure would be derived from Bahana’s asset and capital, which is valued at around Rp 1 trillion and Rp 400 billion, respectively.
Once the transaction is completed, BRI, as the majority shareholder, will look to have more control over the operations of the company, including the raising and deployment of funds for investment.
Haru added that fintech is one of the verticals the fund will be targeting, but said that it would also look at other sectors that would support the core business of the bank.
“What’s important is that it can provide support to the holding company, BRI, whether it is directly related to financial services or non-financial services such as business process digitalization,” he said.
The venture capital arm will not be solely focused on startup investments, Haru said. It will also manage funds to be deployed for small financial institutions and cooperatives in various regions, as part of an effort to support government programs.
“It will be both strategic and financial. It will be profit oriented – the profit can be direct financial profit but also indirect financial profit. We are also looking for social profit, social benefit,” he said.
In branching out into the venture capital space, BRI will be following the lead of fellow state-owned lender Bank Mandiri, which established its venture capital arm, Mandiri Capital Indonesia, in 2016. Last year private lender BCA also set up its own VC vehicle called Central Capital Ventura.
As far as state-owned firms are concerned, Telkom Indonesia was the digital ventures pioneer, with its VC subsidiary MDI Ventures, founded in 2015.
Haru said unlike Bank Mandiri and Telkom, BRI has decided to acquire an existing VC firm as it would be a faster way to roll out its venture capital business. Furthermore, in Bahana, BRI says it sees the “ideal” firm due to its license and its subsidiary presence nationwide.
With its 35 per cent stake, BRI is currently the second-largest shareholder in Bahana. The majority shareholder is financial institution PT Bahana Pembina Usaha Indonesia (BPUI), while the remaining stake is owned by BPUI labour union’s cooperative.