Indonesia’s Kresna eyes e-commerce firms after business restructuring

Visual from the company website. August 2015

PT Kresna Graha Sekurindo Tbk (IDX: KREN), one of Indonesia’s largest brokerage firm, will be renamed PT Kresna Graha Investama, a holding company with a focus on investing and acquiring companies engaged in growth sectors such as e-commerce, financial services, healthcare, airlines, mining, property and infrastructure.

“On July 31, we have managed to reorganize our businesses. Now comes a new era to become an investment company. This is a significant turning point,” said president director of Kresna Graha Investama, Michael Steven, on Tuesday.

He said the company has secured permit from the Financial Services Authority (FSA) on July 31 for change of status. The brokerage activities will be handled by PT Kresna Securities.

Currently, Kresna Graha Sekurindo has two subsidiaries in the field of financial services, namely PT Kresna Securities and PT Kresna Asset Management. 

“We will acquire several companies engaging in the field of e-commerce,” said Steven.

John Suryandi, managing director of Kresna Graha, added that there are three start-up companies to be acquired. Two of them are foreign companies. The executives however declined to disclose the estimated investment value of these acquisitions. They however said that Kresna’s cash and cash equivalents are considered sufficient to fund the move.

Surandi said the company will realize the acquisitions plan gradually as it requires large amount of funds. To fund the plan, the company would launch rights issue, convertible bond and other means.

As of end June 2015, Kresna’s cash and cash equivalents amounted to Rp63.74 billion. Kresna has also established a subsidiary called PT Kresna Usaha Kreatif, that will engage in creative business including managing the group’s e-commerce business.

Michael said that the group has mandated PT Kresna Securities to prepare initial public offering (IPO) of two subsidiaries PT Kresna Life Insurance & Pension Fund and PT Kresna Usaha Kreatif . The company mulls a plan to offer 20 per cent to 30 per cent shares to the public through IPO.

He said the IPO is targeted to be realized in the fourth quarter of 2015, or no later than the first quarter of 2016.

Krishna posted a net profit of Rp59.43 billion in the six months to June 2015, or Rp16.32 per share, declining by 2.75 per cent, compared to Rp61.11 billion or Rp18.37 per share in the same period in 2014.

Operating Revenues increased by 2.22 per cent to Rp126.52 billion from Rp123.77 billion in the same period in 2014. The operating revenues were mainly contributed by the securities trading (Rp62.65 billion), brokerage activities (Rp33.53 billion), investment management (Rp6.71 billion), underwriting and securities sale (Rp1.98 billion), mutual funds (Rp1.98 billion).

Company’s operating expenses increased from Rp58.28 billion during the first semester 2014 to Rp65.44 billion in the first half 2015.