IFC invests $10 million into the listed Bank NISP<\/p>\n
JAKARTA (JP): The International Finance Corporation (IFC), a
\nfinancial arm of the World Bank, said on Monday it had invested
\nUS$10 million in equity participation at the publicly listed Bank
\nNISP.<\/p>\n
IFC regional representative for Indonesia Amitava Banerjee
\nsaid the investment showed IFC's confidence in the battered
\nbanking sector of Indonesia.<\/p>\n
"Although small in amount, the investment is important to show
\nthat an institution with a good reputation can still attract
\nforeign investors," Banerjee told reporters in a press meeting.<\/p>\n
The IFC and NISP signed the agreement on Oct. 16, which
\naccording to NISP, would allow the IFC to obtain a stake of up to
\n15 percent in the bank.<\/p>\n
Banerjee said that in 1997, the IFC had already provided the
\nbank with $10 million in loans, of which under the current
\nagreement $5 million would be converted to equity.<\/p>\n
The IFC, he went on, would then inject another $5 million in
\nfresh funds, to round up the total investment of $10 million.<\/p>\n
Banerjee said that NISP's focus on small and midsize companies
\nwas the main reason the bank was selected.<\/p>\n
"It's (NISP) a well managed but medium sized bank supporting
\nsmall and midsize enterprises," he went on.<\/p>\n
NISP president Pramukti Surjaudaja said that the $10 million
\nin funds would be entirely used to strengthen the bank's working
\ncapital.<\/p>\n
He said that although the bank's current capital adequacy
\nratio (CAR) stood at 12 percent, far higher than the minimum
\nrequirement of four percent, the bank needed assurance.<\/p>\n
CAR measures the ratio of a bank's capital against its risk
\nweighted credits.<\/p>\n
"In these times we never know for sure (the situation), so we
\nfeel safer by having the funds," he explained.<\/p>\n
During the crisis, many banks recorded a negative CAR as most
\nof their equity had been eaten up by a cycle of high spending in
\nan effort to maintain their third party funds.<\/p>\n
Bank Indonesia now requires banks to raise their CAR to eight
\npercent by next year and 12 percent by 2002.<\/p>\n
From the $10 million in the IFC's 1997 loans, Pramukti
\ncontinued, the bank had returned $4 million in principle
\npayments.<\/p>\n
He said that of the remaining $6 million, the bank would only
\nhave to pay $1 million, as the IFC had agreed to convert the
\nother $5 million into equity.<\/p>\n
Pramukti said the bank would hold a right issue sometime later
\nthis year to allow the IFC to raise its ownership to a 15 percent
\nstake.<\/p>\n
He said that for the right issue, the IFC agreed to buy NISP's
\nstake at Rp 400 per share, higher than its current market price
\nof Rp 270. Pramukti could not elaborate on the bank's right issue
\nplan.<\/p>\n
Founded in 1941, NISP booked a net profit of Rp 26.2 billion
\n($2.9 million) as of August this year, up from 1999's total net
\nprofit of Rp 19.5 billion.<\/p>\n
Banerjee further said that the IFC had been in Indonesia since
\n1968 with a cumulative investment of over $2 billion.<\/p>\n
He added that since the early 1990s, the institution had
\ninvested almost $900 million in loans and equity in various
\ncompanies.<\/p>\n
"In the last couples of years we have not made significant
\ninvestments here in Indonesia," he said.<\/p>\n
However, he said, looking at the opportunities ahead in the
\nnext year, the IFC was expecting $150 million in new investments.<\/p>\n
"We are looking quite aggressively at providing financing for
\ntrade facilities," he went on.<\/p>\n
Other areas that the IFC was looking at were resource based
\nexport oriented companies, such as gold mining companies, mining
\ncontractors, palm oil and textile companies, he said.<\/p>\n
Banerjee added that the $150 million would come in the form of
\na combination of loans and equity investments.<\/p>\n
"Typically about two thirds to three quarters of our
\ninvestments are in the form of loans," he explained.<\/p>\n
The IFC, he went on, saw itself as a catalyst investor which
\nrequired the cooperation of local financial institutions as it
\nusually contributed no more than 25 percent of a credit scheme.
\n(bkm)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/ifc-invests-10-million-into-the-listed-bank-nisp-1447893297",
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