Danamon issues debt to acquire Adira

The Jakarta Post, Jakarta

Bank Danamon announced on Thursday a plan to issue Rp 2.4 trillion (US$285 million) in subordinated debt to raise funds to purchase majority shares in automotive financing company PT Adira Dinamika Multi Finance.

In a statement to the Jakarta Stock Exchange, the bank said it had signed a conditional sales and purchase agreement with Adira on Jan. 26, but the deal could only be realized after the bank had received approval from its shareholders and the central bank.

"The strategic plan to purchase a majority stake in Adira is part of the bank's attempt to become a major player in the consumer segment," said Danamon president Francis A. Rozario in the statement.

Danamon, the country's fifth largest bank in terms of assets, explained that the plan to engage in the financing industry was driven by the fact that the sector had grown rapidly in the past few years.

Adira's financing portfolio has grown by 110 percent annually in the last three years, with lending in 2003 totaling about Rp 3.7 trillion.

Adira, which was established in 1991, is mostly engaged in financing the purchase of motorcycles. With 105 branches, the company's business has accounted for 12 percent of the total market share, which was worth about Rp 78 trillion last year.

Asia Financial Indonesia Pte. Ltd, a consortium of Temasek Holdings Pte. Ltd. and Deutsche Bank, owns a 61.88 percent stake in Danamon.

The bank's shares on the local bourse ended Rp 50 lower at Rp 2,300 on Thursday on profit taking.