Bangkok Bank acquires majority stake in Bank Permata for $2.3b

Bangkok Bank has acquired an 89.12 percent stake in privately owned Bank Permata from diversified conglomerate PT Astra International and British lender Standard Chartered Bank (SCB).

The Thailand-based bank completed on Wednesday the transaction for Rp 33.66 trillion (US$2.3 billion), equal to 1.63 times Bank Permata’s book value, as agreed by the sellers and buyers in March, Bangkok Bank said in a statement.

Following the acquisition, Bangkok Bank will connect with the Financial Services Authority (OJK) for approval to conduct a mandatory tender offer for the remaining 10.88 percent stake in Bank Permata. It will merge its Indonesian branches with Bank Permata’s.

“[Bank] Permata will give Bangkok Bank a more robust existence in Southeast Asia’s two major economies, reinforcing our position as a respected ASEAN bank,” Bangkok Bank president director Chartsiri Sophonpanich said in the statement.

He added that the lender would support Bank Permata to grow its retail, small and medium enterprise (SME) and corporate businesses, while also improving its customers’ access to growth opportunities in Indonesia.  

Back March, both Astra and Standard Chartered decided to lower Bank Permata’s purchase price from 1.77 times the book value to at least one 1.63 times. Your choice to lower the purchase price was manufactured in light of the unfavorable monetary conditions due to the COVID-19 pandemic.

“Both sellers [Astra and Standard Chartered] and the buyer [Bangkok Bank] decided to the incentive to complete the transaction, aswell as to give a sense of certainty to the marketplace in this uncertain time,” Astra investor relations head Tira Ardianti told The Jakarta Post on April 22.

Despite the cheap, Koneksi Kapital equity analyst Alfred Nainggolan said on Friday that it was a great time for investors to take part in Bank Permata’s tender offer, as its share price was deemed to be at a “premium level” in comparison to its peers.

Bank Permata’s price-to-book value (PBV) currently stands at around 1.5 times. The figure is well above other big-asset banks like privately owned Bank CIMB Niaga, which has a PBV of 0.4 times, Bank OCBC NISP (0.6 times) and state-owned Bank Mandiri (0.9 times).

Bangkok Bank emerged as the customer in December 2019 when it signed a conditional sales and buy agreement (CSPA) with Astra and Standard Chartered to obtain their stakes, 44.56 percent each, in Bank Permata.

The announcement shocked market players as Bangkok Bank was never rumored to want to dominate Bank Permata after Standard Chartered announced in February 2019 that its investment in the bank was no longer important, signaling its willingness to market its stake.

“[Bank] Permata’s team did a significant job and we believe the business’s long-term potential remains strong, nonetheless it was no longer core to your strategy in Indonesia, that will now concentrate on our wholly owned branch business,” Standard Chartered Group leader Bill Winters said in the statement.

Astra, meanwhile, will continue to give attention to growing its retail finance business after its divestment from Bank Permata, as the publicly listed firm remained positive about Indonesia’s financial service sector, Astra president director Prijono Sugiarto said in the statement.

Although the divestment could affect Astra’s profit, Alfred of Koneksi Kapital said the impact would be insignificant, as Bank Permata only contributed around 10 percent to its important thing.

“The divestment is wonderful for Astra as the transaction strengthens the company’s cash position,” he added.  

Astra stocks, traded on the Indonesia STOCK MARKET (IDX) with the code ASII, climbed 0.51 percent on Friday while Bank Permata (BNLI) stocks jumped 1.19 percent pitched against a 0.06 percent decline recorded by the key gauge, the Jakarta Composite Index JCI).

“We believe Bangkok Bank provides the best support for all of us in becoming a stronger player in the Indonesian banking landscape,” Bank Permata president director Ridha DM Wirakusumah said. “We will continue steadily to grow our business as the bank of choice for all our stakeholders and additional strengthen our capabilities in developing our retail, wholesale and sharia businesses.”