Taiwanese Life Insurer to Buy Stake in Indonesia's Bank Mayapada
Jakarta. Cathay Life Insurance, a life insurance unit of Taiwan’s Cathay Financial Holding (Cathay FHC), plans to acquire a 40 percent stake in Bank Mayapada Internasional, an Indonesian lender, in a bid to strengthen its presence in the emerging Asean market.
In a filing to the Taiwan Stock Exchange on Monday, Cathay FHC said its life insurer unit Cathay Life has agreed to buy 1.39 billion common shares of Bank Mayapada at Rp 2,528 per share, a premium price compared to its current market price.
The deal is worth around Rp 3.52 trillion ($280 million).
Bank Mayapada’s shares rose 0.76 percent to Rp 2,000 on Monday’s closing at the Indonesia Stock Exchange (IDX) after hitting its peak at 2,200 during the trading in the day.
The Taiwanese financial holding firm said in a separate statement on Monday that its investment in the mid-sized Indonesian lender “is driven by its stable return as well as its upside potential that could result from the economic growth of Indonesia.”
“Cathay FHC also expects that there will be opportunities for further cooperation between Bank Mayapada and Cathay FHC and its subsidiaries, including Cathay United Bank and Cathay Life. Potential areas of future cooperation include trade finance, foreign exchange, treasury, retail banking, cross-selling, insurance and asset management,” the statement said.
Cathay United is one of the largest commercial lenders in Taiwan.
Cathay Life will wrap up the deal in two stages, first it will acquire a 24.9 percent stake in Bank Mayapada in the first quarter of 2015 before buying the remaining 15.1 percent stake in the second stage, Cathay FHC filing document showed.
Cathay FHC didn’t give details when the second stage of the acquisition will take place, but once its life insurer unit obtained a 24.9 percent of Bank Mayapada, then it will have a right to recommend two candidates for independent directors and one candidate for independent commissioner at the Indonesian lender.
The transactions are subject to approval from both the Indonesian and Taiwanese regulators.
On Monday’s statement, Cathay Life said its parent Cathay FHC is bullish on the overall economic growth trend in the Southeast Asian market and “continues to seek opportunities to expand its presence in Southeast Asia.”
Cathay FHC is a leading financial service provider in Taiwan, which has businesses spanning banking, insurance, investment, venture capital, securities and diversified financial institutions.
The Taiwanese financial holding company said it has recently strengthened its businesses in several emerging Asean markets like Cambodia, Laos, and Myanmar and the Philippines, in the form of branches and representative offices.
Bank Mayapada, with $2.5 billion worth of assets as of the third quarter of last year, was established in 1989 by tycoon Dato Sri Dr. Tahir, the chairman of Mayapada Group.
He ranked 18th on GlobeAsia’s 2014 rich list with a net worth of $1.7 billion.
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