BII plans IPO for motorcycle financing unit

Rendi A. Witular, Jakarta

Publicly listed Bank Internasional Indonesia (BII) plans to sell shares in motorcycle financing firm PT Wahana Ottomitra Multiartha (WOM) to the public via an initial public offering (IPO) in the near future.

BII managing director Rudy N. Hamdani said the IPO for WOM would probably be launched after the bank completed the acquisition of the financing firm, and obtained approval from the stock market authorities, expected early next year.

"We are planning an IPO for WOM after we conclude the acquisition," said Rudy on the sidelines of a ceremony to mark cooperation between the bank and Singapore Airlines on Tuesday.

Rudy refused to disclose the exact timing and details of the IPO plan.

Jakarta Stock Exchange (JSX) listing director Harry Wiguna told The Jakarta Post that there was indeed a plan by WOM to list its shares on the JSX, but the company had not officially submitted a proposal for the plan.

"There has been talks between the JSX, BII and WOM for the IPO plan. However, until now there is has been no official proposal from them," said Harry.

BII completed the signing of a conditional sales and purchase agreement (CSPA) with WOM last month to purchase a 75 percent stake in the company.

The acquisition will help boost BII's ability to provide loans to a broader spectrum of the public, especially to the consumer sector, and an additional distribution channel to cross-sell products that the bank has to offer to the market.

Motorcycle sales in the country have been strong mainly due to falling interest rates, which allows more people to obtain loans at a lower rate for motorcycle purchases. The upward trend is projected to continue next year, as the country's inferior public transportation system prompts people to buy private vehicles.

BII's gross lending grew by 52.2 percent to Rp 12.37 trillion (US$1.36 billion) in the first semester of this year as against Rp 4.24 trillion in the same period last year.

Rudy said that in the next five years, the bank would focus its business on the consumer and small- and medium-enterprises sector.

The bank has targeted consumer lending to reach about Rp 4 trillion this year. As of September, the bank managed to channel some Rp 3.5 trillion, he said.

"We are planning to boost lending for cars, houses and credit cards next year to tap the business opportunities provided by the impressive growth in consumer spending following a rise in business confidence," he said.

Consumer spending has been the country's main engine of economic growth since the Asian financial crisis in late 1997. Domestic consumption accounts for 70 percent of the country's gross domestic product.

BII, the country's sixth largest bank in terms of assets, is 52 percent owned by Kookmin Bank, South Korea's largest bank, and Singapore's Temasek. BII shares on the JSX ended unchanged at Rp 170 on Tuesday.