Wed, 06 Oct 2004

Panin insurance companies join bid for 51 stake in Bank Permata

The Jakarta Post, Jakarta

Publicly listed insurance firm PT Panin Insurance and PT Panin Life, two subsidiaries of Bank Panin, have decided to join a consortium consisting of its parent company and ANZ Ltd. to bid for the government's controlling stake in Bank Permata.

The decision came amid calls from state asset-management firm PT Perusahaan Pengelola Aset (PPA) for the consortium to increase its capital reserves to sufficiently bid for Permata, the country's seventh largest bank.

"We've informed the shareholders that we are currently joining the Panin consortium to bid for Permata," said both Panin Insurance and Panin Life in their report to the Jakarta Stock Exchange (JSX) on Tuesday.

Bank Panin, the nation's eight largest bank, could have difficulty coming up with the funds to acquire Permata due to the limited capital of the bank, particularly amid the central bank's regulation that limits the size of a bank's investment in a single entity to not more than 10 percent of net equity.

As of June, the bank's equity stood at Rp 1.6 trillion (US$177 million) with assets valued at Rp 21.3 trillion. The equity is likely far from enough to acquire Permata despite a contribution from ANZ, which has a 29 percent stake in Panin.

The 51 percent Permata stake on offer is valued at around Rp 1.5 trillion.

Bank Panin shares ended higher by Rp 5 to Rp 345 on the JSX on Tuesday, while Panin Insurance declined by Rp 5 to Rp 290, and Panin Life was unchanged at Rp 140.

The government, via the PPA, controls 97.17 percent of the shares in the publicly listed Permata, plans to sell a 51 percent stake to strategic investors later this year, and another 20 percent to investors in the stock market next year. Proceeds from the sale will be used to help finance the state budget deficit.

Five bidders have been shortlisted, including the consortium made up of Malaysian-based Malayan Banking Bhd. (Maybank) and state pension fund operator PT Jamsostek; Singapore's United Overseas Bank (UOB); the Panin-ANZ consortium; consortium of Britain's Standard Chartered Plc. and PT Astra International; and Malaysia's Commerce Aset-Holding Bhd., which has teamed up with Bank Bumiputera.

The above bidders have recently presented their business plans for Permata in a due diligence session at the PPA office. The preferred bidder is scheduled to be announced later on Friday.