IFC to buy 7% stake in Bank Buana

IFC to buy 7% stake in Bank Buana

Dow Jones, Jakarta

Medium-sized Bank Buana Indonesia will soon have an additional owner - International Finance Corp.

IFC's entry to Bank Buana will be its first investment in Indonesia after the 1997-98 Asian financial crisis.

Bank Buana's managing director Pardi Kendy told Dow Jones Newswires the World Bank's investment arm will sign an agreement later Thursday with Bank Buana's majority and founder shareholder PT Sari Dasa Karsa.

Sari Dasa currently holds around 61 percent of Bank Buana's shares and public investors the remaining 39 percent.

IFC will buy some of Sari Dasa's rights, which will enable it to buy around 7 percent of Bank Buana's enlarged equity through a rights issue next month, Pardi said.

"This is the first IFC investment in Indonesia since the 1997- 98 monetary crisis," Pardi said. "The amount is small, but most importantly it shows that IFC will enter into the country again."

Bank Buana is one of few local banks that survived the Asian financial crisis without capital assistance from the government.

Many foreign investors left the country as the financial crisis deepened into social and political crisis.

IFC, though, isn't a newcomer to Indonesia. It had invested in over 70 companies before the crisis.

Bank Buana will conduct a rights issue in May, which will allow holders of four shares to buy one new share at Rp 360, he said.

Pardi said the bank's American Depositary Receipts have traded on the New York Stock Exchange since Monday. It's the first listing of ADRs by a local bank.

Looking ahead, Pardi expects that Bank Buana's net profit to increase by an estimated 10 percent this year from Rp 251.25 billion last year.