Bank Rakyat Indonesia's share price is displayed on the screen at Indonesia Stock Exchange at the opening bell on Wednesday. (ID Photo)

Huge Success: BRI Raises $6.7b from Rights Issue


SEPTEMBER 29, 2021

Jakarta. State-controlled Bank Rakyat Indonesia, the country's largest lender by assets, has raised $6.73 billion from rights offering this month, ranking it the largest in Southeast Asia this year and one of all time highest in the world.  

The rights issuance is critical in supporting the government's aim to establish a state-owned microlender under the bank, commonly known as BRI.  

"The high interest in BRI's rights issue reflects shareholders' confidence in the vision built by the government through BRI to focus more on financial penetration by securing new sources of growth in the micro-lending segment which ultimately creates added value for all shareholders," Sunarso, BRI president director, said. 

"The aim of BRI, Pegadaian, and PNM's synergy is to make funding available to as many people as possible with as low a cost as feasible," he said. 

The lender sold roughly 28 billion shares through the rights offering, raising a total of Rp 96,5 trillion ($6.73 billion). The government transferred Rp 54.7 trillion in shares in two state-owned finance companies, pawnshop chain Pegadaian and micro-lending firm Permodalan Nasional Madani (PNM), to BRI as part of the transaction.

The lender managed to raise in cash Rp 13,3 trillion from local investors and Rp 27.9 trillion from foreign shareholders.

Hans Kwee, analyst and director of Ekuator Swarna Investama, believed that the high foreign interest in BBRI's rights issue is in line with promising business prospects, especially after synergizing with Pegadaian and PNM.

"With this collaboration, BRI can reduce competition and expand its lending, which will ultimately result in increasing profits," he told the Globe's sister publication Investor Daily.

In the rights offering prospectus, BRI said that its total asset would increase 7.3 percent to Rp 1,515 trillion from Rp 1,411 trillion before the transaction and loan to increase 9 percent to Rp 997 trillion from Rp 914 trillion.

BRI's rights offering is the largest in Southeast Asia, above Singapore Airlines's mandatory convertible bonds offering in June that raised $6.2 billion.