Vickers Ballas boosts stake in RI brokerage

Vickers Ballas boosts stake in RI brokerage

SINGAPORE (Bloomberg): Vickers Ballas Holdings Ltd, a Singapore stock brokerage, is increasing its stake in Indonesia, a market that much of the international brokerage industry has turned its back on.

One of Singapore's largest locally owned brokerages, Vickers Ballas is paying 6.6 billion rupiah (US$554,000) to boost its stake in PT Vickers Ballas Tamara to 75 percent from 50 percent.

The transaction is also the latest link in a chain of expansion moves by Vickers Ballas in Southeast Asia.

While Indonesia has not yet solved its economic problems -- Jakarta's benchmark index fell 8.9 percent Tuesday on concern about possible foreign exchange controls -- Vickers Ballas executives reckon the purchase makes sense beyond the daily turmoil of Indonesia's financial markets.

"We want to be a significant player in the countries we are active in, and this is part of that long-term strategy," said Damien Lim, a senior vice president at Vickers Ballas Holdings.

The Singapore brokerage bought the additional 25 percent of Vickers Ballas Tamara from PT Sukandamulia Prakasa, a privately held Indonesian group.

PT Tamara Bank continues to own the remaining 25 percent of the brokerage. Vickers Ballas said it would pay for the increased stake from dividends from its existing shares in the brokerage.

Since the middle of 1997, East Asia's economic crisis has caused the rupiah to plunge 73 percent against the U.S. dollar, interest rates to soar, and the Indonesian economy to fall into recession. The government expects the economy to contract by at least 15 percent this year.

During the past year, foreign stock brokers have either cut their staffs in Indonesia or left the country entirely as investors have shied away from its volatile financial markets.

"Operationally, we are profitable in Indonesia," Lim said. "We have gained business from brokerages that have left the country."