STANDARD Chartered PLC and PT Astra International on December 12 announced they had entered into a conditional share purchase agreement to sell their respective 44.56% stakes in PT Bank Permata in Indonesia to Bangkok Bank.
Completion of the transaction is subject to certain conditions, including approvals by the shareholders of Bangkok Bank and the receipt of the applicable regulatory approvals in Indonesia and Thailand, which the parties hope to achieve by the end of 2020. Bangkok Bank says it anticipates conducting a mandatory tender offer for the remaining 10.88% stake in Permata following the completion of its acquisition of the 89.12% stake.
Bangkok Bank has agreed to acquire the Permata stakes in an all-cash deal. The purchase price will be a 1.77x multiple of the shareholders’ equity balance as per the most recent financial results of Permata prior to completion. If based on Permata’s September 30 book value, the total consideration to Standard Chartered and Astra would be approximately US$2.67 billion, equivalent to a price of 1,498 rupiah per Permata share, and about US$3 billion for a 100% stake.
The acquisition will be financed through a combination of internal resources and Bangkok Bank’s routine funding activities. The transaction is expected to be accretive to Bangkok Bank’s earnings per share and return on equity immediately post-completion, while the bank’s capital position is expected to remain robust following completion of the deal.
Bangkok Bank says the Permata acquisition underlines its commitment to Indonesia, having been present in that market since 1968, and will further strengthen the bank’s position as a regional player with strong positioning in Thailand and Indonesia – two of the largest markets in Asean.
In acquiring Permata, Bangkok Bank president Chartsiri Sophonpanich says the Indonesian banking sector is poised to continue delivering attractive growth while maintaining healthy margins. “Permata offers us a solid scalable platform with capabilities that complement our strategic objectives, including an extensive distribution network, strong retail deposit franchise and brand, and advanced digital capabilities,” he points out.
Standard Chartered group chief executive Bill Winters says in a statement the sale of its stake in Permata will allow Standard Chartered to focus on its wholly-owned business in the large and strategically important Indonesian market, and will release capital for reinvestment or return to shareholders. “This transaction further demonstrates our focus on executing the refreshed strategic priorities we announced earlier this year, at pace,” he adds.
In selling its stake, Astra president-director Prijono Sugiarto says they regularly carry out strategic reviews of their investment portfolio and make decisions which take into account the best interests of all stakeholders. He explains: “Our decision on Permata takes into consideration its improved performance, the positive prospects of Indonesia’s financial services industry and our strategy to focus on strengthening our existing position as a retail financial services provider in Indonesia. Bangkok Bank is one of the largest banks in Thailand and well capitalized. Existing business relationships between Astra Group and Permata will continue as usual and we will be exploring new areas of cooperation.”
J.P. Morgan acted as financial adviser to Astra and Standard Chartered, while Morgan Stanley was the financial adviser to Bangkok Bank.
Permata is currently the 12th largest bank in Indonesia by total assets. The acquisition by Bangkok Bank will allow it to tap the latter’s expertise in corporate and SME banking, strong network and relationships with top corporates across Asia, as well as cross-border product and sectorial expertise. It reported total assets of about US$10.9 billion and total shareholders’ equity of approximately US$1.7 billion as of the quarterly report ending September 30. For the nine-month interim period ending September 30, Permata reported a net income of about US$77 million.