Indonesia-listed PT Bank Aladin Syariah Tbk (formerly Bank Net Indonesia Syariah Tbk) is in talks with a host of companies to secure a strategic investment, sources privy to the development told DealStreetAsia.
According to the lender’s disclosure on Indonesia Stock Exchange (IDX) on Thursday, the bank is currently exploring options with “some potential strategic partners, one of them being Shopee [owned by Sea Group].”
When contacted, Sea Group denied having held any discussion with the lender. “Neither Shopee nor Sea has held, or is holding, any discussion on a strategic partnership with Bank Aladin,” said the spokesperson.
Bank Aladin Syariah is also understood to have held talks with PT Sumber Alfaria Trijaya Tbk (Alfamart), a franchised chain of convenience stores in the archipelago, for a potential investment.
Parallelly, DealStreetAsia has learnt that both Bank Aladin Syariah and Alfamart are planning separate fundraising plans through the issuance of new shares. Bank Aladin plans to issue 2 billion new shares to shore up its core capital even as it is in talks for strategic investment. And, Alfamart plans to issue 5 million new shares to invest in a tech company, which sources indicate could be Bank Aladin.
Meanwhile, the spokesperson at Alfamart said: “Regarding the rights issue plan, the company will seek approval from shareholders at the EGM on May 6, and to date, the company has not had any commitments related to investment plans in other companies.”
Bank Aladin Syariah was listed on IDX in February 2021. According to its prospectus, the bank was established in 1994 as PT Bank Maybank Nusa International. In November 2020, the company restructured its business to adopt a sharia digital bank business model.
As of September 2020, Bank Aladin Syariah’s core capital stood at Rp 651 billion, while OJK’s requirement specifies that banks in Indonesia need to have at least Rp 2 trillion by the end of 2021. This gap, observers said, goes on to signal Bank Aladin’s dire need to raise capital.
PT NTI Global Indonesia holds a 60.55% stake in the bank while 37.9% is held by the public. PT Alphaplus Adhigana Asia owns a 1.55% stake in the lender.
In April 2021, the lender held an Extraordinary General Meeting to appoint Dyota Marsudi, a former executive director at Singapore-based Vertex Ventures, and co-founder of Happy5. Marsudi is also the son of Indonesian foreign minister Retno Marsudi. Three directors at Bank Aladin Syariah Tbk previously worked in tech unicorns including digital wallet firm OVO, GoPay, and Traveloka.
This is not the first that time Sea Group is looking to acquire a bank. It earlier bought a 100% stake in Bank Kesejahteraan Ekonomi (BKE), through indirect ownerships in both shareholders, PT Danadipa Artha Indonesia (DAI) and PT Koin Investama Nusantara (KIN). It paved the way for Sea to become the ultimate shareholder of BKE. The bank subsequently was renamed Bank Seabank Indonesia.
According to Indonesia’s Financial Services Authority (OJK) rules that were adopted in 2016, a non-bank entity can own a maximum of 30% stake in a bank. If non-bank entities own beyond 40% stake, the bank has to automatically make an initial public offering.
Unison between banks and tech startups gathering steam
Indonesia’s banking sector has seen a spate of deal-making activity as tech startups are looking to deepen their financial services footprint. And, banks are exploring strategic funding options to meet their core capital requirements.
Banking industry observers note that the sector is poised to see further consolidation. Among major deals in the space, Ant Group-backed fintech Akulaku acquiring a 25% stake in Bank Yudha Bhakti (now Bank Neo Commerce Tbk) in September 2020. Sea Group acquired small lender Bank Kesejahteraan Ekonomi. Ride-hailing giant Gojek secured a 22.16% stake in Bank Jago (formerly Bank Artos) in December 2020. DealStreetAsia has learnt that Indonesian unicorn Traveloka is looking to buy or pick up a stake in a bank in Indonesia with the aim to turn the local lender into a digital bank.
While on one hand, tech companies such as Grab, Traveloka, and ALAMI are said to be in the race to invest in small-asset banks to collaborate on digital banking, established banks are also making strategic investments in digital companies to tap on to their users.
Earlier this year, Standard Chartered made headlines for investing in Bukalapak, which has about 100 million users and 13.5 million sellers in the country.
Indonesia has the world’s fourth-largest unbanked population, where 51% of the adults, or about 92 million people, do not have bank accounts. Yet, the country has the highest net interest margin (NIM) in Asia. As of April 2020, the average NIM of Indonesian lenders was 4.57%, per OJK data. This is higher than the average NIM in Thailand and Malaysia that stood at 3.5% and 2.08%, according to separate Bloomberg Q1 2020 data.
Some local news outlets previously reported that Grab and OVO have held discussions with PT Bank Capital Indonesia Tbk.
“…still on the progress”, said the lender’s management when DealStreetAsia asked about the potential investment from Grab and OVO. Meanwhile, Grab declined to comment on the development.
Collaboration between banks and tech companies is a win-win situation for both parties. Last year, OJK issued a new rule stating lenders need to have a minimum core capital of at least Rp 3 trillion ($207.89 million) by the end of December 2022. It added that the controlling shareholder, which owns a minimum of 25% stakes in a bank, can own another bank through the consolidation route via mergers and acquisitions.
OJK is also working on a regulation that states that going forward a new digital bank will need to have a minimum core capital of at least Rp 10 trillion ($693.43 million). This provision is drafted in the new digital bank regulation that is slated to be finalized this year.