Cathay Financial Holding Co (國泰金控) yesterday announced that it would maintain a 40 percent stake in PT Bank Mayapada Internasional Tbk by participating in the Indonesian firm’s latest capital increase plan to prevent share dilution.
Cathay Life Insurance Co (國泰人壽), the conglomerate’s biggest subsidiary, is to purchase 800 billion rupiah (US$57.48 million) of new shares issued by the Indonesian lender in its fourth round of fundraising since the Taiwanese financial giant took a stake in 2015.
Cathay Life’s investment would exceed its previous commitments of NT$370 million, NT$950 million and NT$910 million (US$12.47 million, US$32.03 million and US$30.68 million at the current exchange rate) in the Indonesian lender’s previous fundraising rounds, it said in a filing with the Taiwan Stock Exchange.
From 2013 to last year, the Indonesian lender has recorded annual growth of more than 30 percent in its total loan book and deposits, while generating new interest margins of 4 percentage points.
PT Bank Mayapada needs continued capital increases to expand and capture opportunities resulting from Indonesia’s robust economic growth, Cathay Life said.
With its 40 percent stake, Cathay Life is the Indonesian lender’s second-biggest shareholder and is eligible to determine two board of director seats and one board of supervisors seat.
Preventing share dilution is part of the Cathay Financial’s Southeast Asia strategy, Cathay Life said.
The company also holds a 22.7 percent stake in Philippine lender Rizal Commercial Banking Corp.
The capital increase is to take place in the second half of this year, pending approval by the lender’s board of directors, as well as Indonesian and Taiwanese regulators, Cathay Life said.
Cathay Financial shares yesterday lost 0.57 percent to close at NT$52.2 in Taipei trading, underperforming the TAIEX, which dropped 0.18 percent to 10,559.97 points.
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