Maybank Purchases PT Bank Internasional Indonesia

March 26 (Bloomberg) -- Malayan Banking Bhd., Malaysia's biggest bank, offered $2.7 billion for PT Bank Internasional Indonesia to become the largest foreign financial services company in the Southeast Asian nation.

Maybank beat Bank of China Ltd. to buy a 56 percent stake held by a group led by Singapore sovereign wealth fund Temasek Holdings Pte for $1.5 billion, 23 percent more than yesterday's closing price. Maybank will also offer $1.2 billion for the rest of the stock, it said in a statement today.

The offer values Bank Internasional at 4.7 times book value, about double the average valuation among Indonesia's publicly traded banks, data compiled by Bloomberg show. A takeover would give Maybank 230 branches in the world's fourth-most populous country, a market it said is ``under-penetrated.''

``It's a bit pricey,'' said Li Hsia Wong, an analyst at Affin Securities Sdn. in Kuala Lumpur. ``To really have stronger growth they need to look outside Malaysia. The Malaysian market is quite saturated.''

Bank Internasional, Indonesia's sixth-largest bank, surged 12 percent to 465 rupiah at the 4 p.m. close in Jakarta, the biggest gain in four years. The stock has risen 63 percent this year, compared with an 11 percent drop in the benchmark index.

Maybank said it's offering 510 rupiah a share for Bank Internasional, and won't raise the bid price.

`Good Buy'

Maybank shares were suspended on the Kuala Lumpur stock exchange before the announcement. The stock closed at 8.95 ringgit yesterday, down 2.7 percent this year.

``For anyone that doesn't have exposure to the Indonesian banking sector, this would be a good buy,'' said Winston Sual, director of PT Panin Sekuritas, which manages $272 million at its fund management division.

Temasek and its partners won a bid for a 51 percent stake in Bank Internasional in 2003. The bank was the third that Indonesia sold that year to fund a budget deficit and as part of state asset sales following the 1997 Asian financial crisis.

The sale of Bank Internasional will allow Temasek and its partners to profit from an investment that has soared about fivefold since they first paid 1.99 trillion rupiah ($216 million) for the stake in Bank Internasional.

Declining Profit

The shares didn't reflect the bank's declining profit. Net income fell 65 percent from 2005 to 2007 after Bank Internasional bought a 43 percent stake in PT Wahana Ottomitra Multiartha, a motorcycle financier. Wahana posted a 241.4 billion rupiah loss in 2007, Bloomberg data shows.

Maybank ``are seeing that the fundamentals of the bank are better than the market perceives,'' said Felix Sindhunata, head of equity research at Jakarta-based PT Mega Capital Indonesia, which manages about $163 million.

Temasek owns 75 percent of a joint venture that holds about 56 percent of Bank Internasional. Kookmin Bank, South Korea's largest, owns the remaining 25 percent. Kookmin Bank fell 1.4 percent in Seoul trading today.

Bank Internasional, formerly part of the Sinar Mas Group, owned by Eka Tjipta Widjaja's family, received a 11.3 trillion rupiah government bailout in June 1999 in the aftermath of the regional crisis.

Overseas Push

Industrial & Commercial Bank of China Ltd. and State Bank of India have made acquisitions in Indonesia in the past two years, gaining a foothold in an economy that grew 6.3 percent in 2007. Temasek said in a statement it remains ``optimistic'' about Indonesia's long-term prospects.

Indonesia has 5.5 bank branches per 100,000 people, compared with 6.7 in India and 6.5 in Malaysia, according to data from the countries' central banks.

``The Indonesian banking sector remains under-penetrated with excellent long-term growth potential,'' Maybank Acting Chief Executive Officer Aminuddin Md Desa said in today's statement. ``This acquisition effectively enables Maybank to leapfrog into the Indonesian banking market.''

Maybank, based in Kuala Lumpur, is expanding overseas as economic growth slows at home and competition increases from foreign lenders such as Australia & New Zealand Banking Group Ltd. The Malaysian bank said in February 2007 it would seek to buy into an overseas lender in one to two years to help boost profit.

Profit Contribution

Maybank said it expects to close the Bank Internasional transaction in six months, said that the acquisition will boost profit starting in the third year. The bank expects the share of revenue from overseas markets to increase to 30 percent within two years from 19 percent now, Aminuddin said.

Temasek, set up more than three decades ago to hold the city's state-owned assets, is selling its stake to meet Indonesia's central bank rules that limit investors to ownership of one bank. It also owns part of PT Bank Danamon Indonesia.

Credit Suisse Group and Goldman Sachs Group Inc. are advising Temasek.

To contact the reporters on this story: Angus Whitley in Kuala Lumpur at awhitley1@bloomberg.net; Berni Moestafa in Jakarta at bmoestafa@bloomberg.net.


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