IBRA sells 51% stake in Niaga to Malaysian firm
IBRA sells 51% stake in Niaga to Malaysian firm
The Jakarta Post, Jakarta
After months of delay, the Indonesian Bank Restructuring
Agency (IBRA) has sold the controlling 51 percent stake in Bank
Niaga to one of Malaysia's leading financial conglomerates,
Commerce Asset-Holding Berhad (CAHB).
In the deal signed on Friday evening, Commerce paid Rp 26.5
per share, which puts the value of the 51 percent stake at some
Rp 1.05 trillion (about US$114 million).
The deal will mean more revenue for IBRA, which, as of October
of this year, had secured Rp 40 trillion out of its 2002 revenue
target of Rp 45.6 trillion.
Following the deal, the government's stake in Niaga dropped to
46 percent from 97 percent.
IBRA spokesman Raymond van Beekum told The Jakarta Post on
Sunday that the contentious issue that dragged the negotiation of
the bank's sale on until late Friday was the composition of the
bank's board of commissioners and directors after Commerce became
the majority shareholder.
Earlier, IBRA chairman Sjafruddin Temenggung said that
Commerce demanded the right to appoint its own president
director, who would then appoint the bank's board of directors.
The Malaysian investors were also seeking the right to appoint
the chief commissioner.
IBRA, on the other hand, wanted the appointment of the
management to be based on Bank Niaga's shareholder composition.
Raymond said IBRA and Commerce had agreed to a four-three
composition with Commerce taking four seats on the board,
including the president director, while IBRA would take three,
including two directors and one commissioner.
All details on the deal will be released on Monday, Raymond
said.
Separately, Commerce called the deal a "groundbreaking
development" for the Association of Southeast Asian Nations
(ASEAN), in which Malaysia and Indonesia are members.
"It will enhance greater economic integration and
interdependence among ASEAN members, especially with the onset of
AFTA (ASEAN Free Trade Area).
"CAHB's acquisition of Niaga is expected to create one of the
leading financial institution platforms both in Malaysia and
Indonesia," said Rozali Mohamed Ali, director of Commerce and the
CEO of Bumiputra-Commerce Bank, in a statement reported by Agence
France Presse.
"With a strong platform and cultural affinities, the new
franchise will be positioned to take advantage of future growth
in the retail sector and consumer sectors as well as in inter-
ASEAN trade flow," he said.
Commerce is the second largest banking group in Malaysia with
a market capitalization of over US$2.2 billion and total group
assets of almost $21 billion.
Niaga is the ninth largest bank in the country with assets of
over $2.7 billion as of June 30 of this year.
IBRA owns a 97 percent stake in Niaga after the government
injected the bank with recapitalization bonds to offset bad loans
resulting from the 1997 economic crisis.
The agency has been trying to sell Niaga since early this year
as part of a wider program under the International Monetary
Fund's (IMF) economic reform package.
But the sale process has been delayed many times because the
prices set by bidders for the bank were lower than the
expectation of the government and the House of Representatives.
Commerce was selected from among the four bidders. The other
bidders were a consortium led by Australia & New Zealand (ANZ)
Banking Group Ltd., Bank Victoria International and the Batavia
Investment Fund.
At the request of the House of Representatives, IBRA asked
Commerce in September to increase its price to about Rp 30 per
share, but the demand was rejected.
State Minister of State Enterprises Laksamana Sukardi has said
that Commerce's price was "realistic", citing that the price is
1.48 times Niaga's book value. By comparison, IBRA sold the
country's largest private bank, Bank Central Asia, at a share
price that was 1.1 times of its book value.
Bank Niaga Sale's Chronology
May 25, 2000: House of Representatives okays $1.12 billion
recapitalization plan for Bank Niaga.
Oct. 5, 2000: The government agrees with the House to delay
the Niaga divestment program.
Feb.28, 2001: The House gives its approval for the government
to divest its shares in Niaga in the first semester of 2001.
Feb.12, 2002: The Indonesian Bank Restructuring Agency (IBRA)
launches the sale of a 51 percent stake in Niaga to strategic investors.
March. 20, 2002: IBRA announces that there are 19 investors which
have expressed interest in purchasing the government's 51 percent stake
in Niaga.
April 16, 2002: IBRA announces four short-listed bidders, which
include a consortium led by Australia & New Zealand (ANZ) Banking
Group Ltd., Malaysian financial group Commerce Asset-Holdings Berhad,
Bank Victoria International and Batavia Investment Fund.
June 9, 2002: The sale of the 51 percent stake in Niaga to
strategic investors is canceled because of low bidding prices.
June 11, 2002: IBRA says it will sell a 20 percent stake in
Niaga on the stock market. PT Trimegah Securities is asked to carry
out the sale on the stock market.
July 10, 2002: After selling a 0.4 percent stake, IBRA suspends
the sale of Niaga shares on the stock market to prevent the price from
dropping further.
July 23, 2002: IBRA announces that it will auction again a 51
percent stake in Niaga to strategic investors.
Aug. 24, 2002: IBRA says it has received bids from the four
investors that participated in the first bidding. Commmerce offers
the highest bid at Rp 26.5 per share.
Sept. 19, 2002: IBRA asks CAHB to raise its bid to about Rp 30
per share, but the request is rejected.
Nov. 8, 2002: IBRA signs the sales and purchase agreement with
Commerce.