PT Bank Mandiri Tbk (BMRI), Indonesia’s largest bank in terms of assets, has launched a venture capital business unit PT Mandiri Capital Indonesia (MCI), to invest in promising financial technology (fintech) startups.
“We will nurture incubators, cooperate with other venture capital firms as well as facilitate deal flow (to startups),” Eddi Danusaputro, CEO of Mandiri Capital Indonesia said, at a press conference, on the launch of the venture capital unit.
The bank’s captive VC unit will have an initial capital of Rp 500 billion ($36.90 million) and it will look at investing in startups that provide innovative payment services relevant to e-commerce.
Explaining the rationale of getting into the venture capital stream, Bank Mandiri president director Budi Gunadi Sadikin said, Indonesia is seeing the emergence of disruptive technologies such as ride-hailing apps and and e-commerce that have changed the way people do business. The business of banking is savings, lending and enabling movement of capital. “Financial technology startups are in this money moving business. That’s why we (Bank Mandiri) entered this space with a focus on fintech,” Budi stated.
The bank VC is focussing on the fintech space to leverage on its existing business. At present, Bank Mandiri serves 2 million merchants, which receive payments in cash. The bank also serves 300,000 merchants that receive payments through electronic data capture (EDC) machines.
The bank’s move in establishing venture capital is also in line with a rule by the Financial Services Authority (FSA) that asked domestic banks to facilitate startups outside the financial sector.
FSA plans to issue a venture capital regulation that would require firms to invest 70 per cent of their money in start-ups, which do not have access to conventional lending. The regulation is expected to come into play by the end of this year.
Mandiri Capital earlier set up a joint venture (JV) with BC Card from South Korea to run the EDC operations of the bank.
The newly-formed venture capital (VC) will also take over part of PT Digital Artha Media (DAM) shares from its sister company PT Mandiri Manajemen Investasi (MMI). MMI now owns 30 per cent at DAM joint with investment company PT Kresna Graha Investama Tbk (KREN).