DBS Must Sell Danamon Shares If Stake Exceeds 80%, Bourse Says
Munshi Ahmed/Bloomberg
Customers use DBS Group Holdings Ltd.’s self-service stations outside a bank branch in Singapore.
Customers use DBS Group Holdings Ltd.’s self-service stations outside a bank branch in Singapore. Photographer: Munshi Ahmed/Bloomberg
DBS Group Holdings Ltd. CEO Piyush Gupta
Munshi Ahmed/Bloomberg
Piyush Gupta, chief executive officer of DBS Group Holdings Ltd.
Piyush Gupta, chief executive officer of DBS Group Holdings Ltd. Photographer: Munshi Ahmed/Bloomberg
DBS Group Holdings Ltd. (DBS), Southeast
Asia’s largest bank, must sell shares of PT Bank Danamon
Indonesia (BDMN) back to the public if it owns more than 80 percent of
the lender after a takeover, according to the Indonesian bourse.
DBS offered to buy Jakarta-based Danamon for about $7.2
billion on April 2 in the biggest takeover by a lender in the
region. Indonesia’s exchange rules require investors buying a
listed company through a tender offer to pare their stakes down
to no more than 80 percent, according to the Indonesian capital
market supervisory agency.
The shares, if sold in a block, would amount to about
$1.4 billion based on DBS’s bid price, exceeding any stock sale
in Indonesia, according to data compiled by Bloomberg. DBS,
which has two years from the close of the offer to pare down
its stake, said in an e-mailed response to queries late
yesterday it could “spread” the share sale over that time.
“Two years down the road, we expect Danamon to be showing
synergies with DBS, based on DBS’s own timeline,” said Anand Pathmakanthan, an analyst at Nomura Singapore Ltd. who rates DBS
a buy. The share sale is “not a pressing issue,” he said.
Pathmakanthan said the Singapore bank could also seek an
extension after two years similar to Malayan Banking Bhd. (MAY)’s
purchase of PT Bank Internasional Indonesia in 2008. The
Indonesia regulator agreed to extend the two-year timeframe if
losses exceeded 10 percent of the investment.
DBS said last week it will pay Singapore’s Temasek Holdings
Pte (TMSK), its biggest stakeholder, 45.2 trillion rupiah ($4.9 billion)
in new shares for its 67 percent stake and buy the remaining
stock from other shareholders for 21.2 trillion rupiah in cash.
The cash offer, at 7,000 rupiah a share, is at a 52 percent
premium from Danamon’s 4,600 rupiah close on March 30.
‘Good’ Banking Outlook
“A lot of investors will likely want to sell their shares
to DBS because of the premium,” said Syaiful Adrian, a banking
analyst at Jakarta-based PT Ciptadana Securities, who’s advising
his clients to join the tender offer. Over the next two years
“banking shares outlook should remain good with lending growth
that’s driven by investment and consumer credit,” he said.
DBS should comply with the rule of holding no more than 80
percent of Danamon, Eddy Sugito, listing director at the
Indonesia Stock Exchange, said in a mobile-phone text message
yesterday.
“We intend to keep the listing” of Danamon, Edna Koh, a
Singapore-based spokeswoman at DBS, said yesterday. She also
referred to a DBS filing with the Singapore stock exchange last
week, which said the lender will have to ensure it holds no more
than 80 percent of Danamon shares within two years of the
acquisition, unless it gets a waiver or extension from
Indonesian authorities.
Economic Growth
Acquiring Indonesia’s sixth-largest bank by assets will
help DBS branch out from Singapore and Hong Kong to tap an
economy that grew last year at the fastest pace since before the
Asian financial crisis. Trade and infrastructure finance as well
as corporate and retail banking are among the promising areas in
Indonesia, Southeast Asia’s biggest economy, Piyush Gupta, chief
executive officer of the Singapore-based bank, said last week.
The takeover may be delayed as Indonesian regulators could
use DBS’s bid to get reciprocal access to Singapore’s banking
market, the Straits Times reported on April 6. Difi Johansyah, a
spokesman for the central bank, said in a mobile-phone text
message yesterday that the takeover isn’t a problem as long as
it strengthens Danamon, declining to comment on reciprocity.
The Monetary Authority of Singapore, the city’s central
bank, said in an e-mailed response to queries that four
Indonesian banks have operations in the city-state, adding that
“all foreign banks are free to expand their activities in
Singapore subject to the guidelines specific to the license
under which they operate.”
For DBS, the acquisition gives it access to Danamon’s
3,000-branch network that serves 6 million customers. The
Indonesian economy grew 6.46 percent last year, a pace unseen
since before the Asian crisis in 1997, and is forecast to grow
6.5 percent this year.
To contact the reporter on this story:
Berni Moestafa in Jakarta at
bmoestafa@bloomberg.net;
Sanat Vallikappen in Singapore at
vallikappen@bloomberg.net
To contact the editor responsible for this story:
James Gunsalus at jgunsalus@bloomberg.net
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