Cathay Life Insurance Co Ltd (國泰人壽), the life insurance arm of Cathay Financial Holding Co Ltd (國泰金控), yesterday announced a plan to acquire a 40 percent stake in Indonesia’s PT Bank Mayapada International Tbk for NT$8.7 billion (US$271.83 million), in a bid to expand its presence in ASEAN markets.
“The transaction is set to be executed in two stages, with the first stage of acquisition expected to be completed in the first quarter of the year,” Cathay Financial president Lee Chang-ken (李長庚) said at a news conference.
In the first stage, Cathay Life would acquire a 24.9 percent share of Bank Mayapada and the purchase of a 15.1 percent share would be carried out at the second stage, Lee said.
The second stage of the acquisition plan is still subject to final approval by the Indonesian Financial Services Authority.
Lee considers the NT$8.7 billion price tag reasonable as it values the Indonesian bank at a price-to-book value ratio of 3.15, which Lee said is a valuation consistent with typical mergers and acquisitions deals in Indonesia.
After completing the first stage of the acquisition, Cathay Life is set to obtain three out of Bank Mayapada’s 11 board seats, Lee said.
Cathay Life was interested in investing in Bank Mayapada because of the bank’s stable returns and its prospects going forward, as it is expected to benefit from Indonesia’s fast-paced economic growth. The country is expected to see GDP grow at a compound annual rate of 6 percent during the period from last year to 2018, Lee said.
Cathay Financial also expects further opportunities for cooperation to arise between the two sides.
Bank Mayapada, founded in 1989, is a mid-sized commercial bank owned by Dato Sri Tahir, a billionaire who owns various businesses. Its total assets reached US$2.5 billion as of the third quarter last year, with an average return on average equity of 14.7 percent at that time.
The bank has 175 branches and offices across the nation, with around 80 percent located in major cities, and currently focuses on its corporate lending business.
Cathay Financial has been positive on the economic growth momentum in the ASEAN market, which has pushed it to continue seeking opportunities to expand its presence in Southeast Asia over the past few years.
Cathay United Bank (國泰世華銀行), the banking arm of Cathay Financial, has recently established subsidiaries, branches or representative offices in emerging ASEAN markets, such as Cambodia, Laos and Myanmar.
In the meantime, Cathay Life has strengthened the group’s presence in relatively mature ASEAN markets like the Philippines and Indonesia.
In December last year, Cathay Financial acquired a 20 percent stake in the Philippines’ Rizal Commercial Banking Corp for NT$12.55 billion, also through Cathay Life. The deal might be completed by the end of the first quarter.
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