BII to issue up to US$200 million subordinated bonds
Leony Aurora, The Jakarta Post, Jakarta
Publicly listed Bank International Indonesia (BII) plans to issue up to US$200 million in subordinated bonds early next year to strengthen its working capital and fund its acquisition of a financing firm.
BII president Henry Ho Hon Cheong said that the dollar denominated bonds would be on offer in January next year and listed on the Singapore Stock Exchange.
"We're looking at between $100 million and $200 million (worth of bonds)," he said after the bank's public expose on Monday. Road shows will be conducted in Jakarta, Singapore, and Hong Kong in early January 2005.
Previous reports mentioned Barclays Capital as one of the selected underwriters for the upcoming bond issue.
Ho neither confirmed nor denied this report. "We will announce (the advisors) when (the bond issue) is approved by Bank Indonesia (BI)," he said.
BII, the country's sixth largest bank in terms of assets, recently completed the signing of a conditional sales and purchase agreement (CSPA) with motorcycle financing firm PT Wahana Ottomitra Multiartha (WOM) to purchase a 75 percent stake in the company.
Regarding rumors that the bank might not be allowed to buy the stake it wants due to the central bank's legal lending limit, Ho said, "We are confident that in working with BI we can make an acquisition that we are happy with".
The acquisition would be made by March 2005.
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. In 2003, the company had assets valued at Rp 756 billion ($82.17 million) and a net profit of Rp 53.7 billion.
The acquisition will help boost BII's ability to provide loans to the consumer sector, which will be its focus in 2005, aside from the small and medium enterprises sector.
The country's economic growth has been mainly driven by consumer spending. The government has forecast growth next year to reach 5.5 percent, higher than this year's estimate of 4.8 percent.
Ho estimated loan growth to be higher than 20 percent next year.
In the first nine months of the year, BII's gross lending grew by 39.7 percent to Rp 12.56 trillion as compared to Rp 8.99 trillion in the same period of the previous year.
Net profit in the period soared to Rp 618 billion, double the 2003 full year performance of Rp 309 billion, according to the company's latest financial report.
As of September, BII is 56.88 percent owned by Sorak consortium -- comprising South Korea's largest bank Kookmin Bank and Singapore's Temasek -- 20.78 percent by the government and the rest by the public.