BII to acquire motorcycle financing firm WOM

BII to acquire motorcycle financing firm WOM

The Jakarta Post, Jakarta

In a bid to cope with the growing competition in the country's
banking sector, publicly listed Bank Internasional Indonesia
(BII) plans to acquire a controlling stake in motorcycle
financing firm PT Wahana Ottomitra Multiartha (WOM).

BII president director Henry Ho said the bank had completed
the signing of a conditional sales and purchase agreement (CSPA)
with WOM, and planned to purchase a 75 percent stake in the
company.

"Signing the CSPA is the first step toward the acquisition of
WOM. We expect to complete this transaction by the end of the
first quarter of next year," Ho told reporters in a press
conference on Thursday.

The next step would include obtaining approval from relevant
regulators, including the central bank, the Ministry of Finance,
the Capital Market Supervisory Agency (Bapepam), and the Jakarta
Stock Exchange (JSX), he said.

Ho refused to disclose the value of the acquisition, pending
the approval of regulators.

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.

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.

Ho said BII was likely to issue subordinated debts to finance
the acquisition program, however, the bank could not disclose the
amount and the terms for the planned debts.

Like many other banks, BII plans to tap the business
opportunity provided by the impressive growth in consumer
spending, which has become the main engine of the country's
economic growth since the Asian financial crisis in late 1997.
Consumer spending accounts for 70 percent of the country's gross
domestic product (GDP).

A similar move to purchase a financing company has also been
taken by Bank Danamon, the country's fifth largest bank by
assets, in April. The bank, which is controlled by a consortium
of Singapore investment firm Temasek Holding and Germany's
Deutsche Bank, has bought a 75 percent stake in automotive
financing firm PT Adira Dinamika Multi Finance for Rp 850 billion
(US$94 million).

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

WOM is one of the leading players in the country's motorcycle
financing business with 77 branches and sub-branches throughout
Java and North Sumatra. At present, the company is expanding its
distribution network in South Sumatra, Kalimantan and Sulawesi.

Last year, the company has assets valued at Rp 756 billion and
a net profit of Rp 53.7 billion.