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MANDIRI SETS ASIDE $822M FOR ACQUISITIONS

Posted on February 06, 2014 on 06:59:45 WIB

Bank Mandiri, Indonesia’s largest lender by assets, is setting aside Rp 10 trillion ($822 million) this year for acquisitions, expected to expand the state-controlled bank’s business. An anticipated slowdown in lending growth this year forced lenders such as Mandiri, Bank Rakyat Indonesia (BRI), and Bank Central Asia (BCA) to seek acquisition opportunities in other non-bank financial institutions, such as insurance and securities, to boost revenue. Budi Gunadi Sadikin, Mandiri’s president director, said Indonesia’s current economic fluctuations should present opportunities for larger companies to buy smaller firms, as the smaller businesses are more fragile and vulnerable to market fluctuations. “Opportunity for inorganic expansion can come unexpectedly,” Budi told Investor Daily earlier this week. He was referring to the business expansion strategies of the acquiring companies. This form of expansion is less focused on growing existing units. “We still have about Rp 10 trillion in funds for acquisition, so when an opportunity presents itself we can take advantage of it,” Budi said. Mandiri last month bought control in Asuransi Jiwa InHealth Indonesia, a life insurance company, as part of the lender’s strategy to bolster its presence within the life insurance industry. InHealth was controlled by Askes but by law, Askes has to divest its interests in other companies by 2014 as it will be transformed this year into a state social security agency (BPJS) — the country’s first comprehensive health-care program. BRI is also seeking to acquire securities companies this year, Ahmad Baiquni, the lender’ finance director, said. “We are targeting security firms as we do not yet own one. We are assessing several securities right now,” Ahmad said, declining to elaborate further on the state-owned bank’s plans. Jahja Setiaatmadja, president director of BCA, said his company was also seeking to establish a life insurance company. Jahja projected that BCA’s life insurance company would be operational in the third quarter of this year. BCA currently has shares in general insurance company Central Sejahtera Insurance. Bank Indonesia, the country’s central bank, is targeting a 15 percent to 17 percent growth in lending this year, compared to an estimated 22 percent increase in lending growth last year. This in part due to the slowdown in economic growth in the country.


Source: Jakarta Globe, 03 January 2014

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