Temasek Holdings to sell its entire stake in Indonesia's Bank Danamon to Japan's Mitsubishi UFJ Financial

Mitsubishi UFJ Financial Group will acquire Temasek's 73.8 per cent stake in Danamon in three parts, with an initial acquisition of 19.9 per cent stake at 8,323 Indonesian rupiah apiece or 15.875 trillion Indonesian rupiah (S$1.58 billion).
Mitsubishi UFJ Financial Group will acquire Temasek's 73.8 per cent stake in Danamon in three parts, with an initial acquisition of 19.9 per cent stake at 8,323 Indonesian rupiah apiece or 15.875 trillion Indonesian rupiah (S$1.58 billion).PHOTO: REUTERS

SINGAPORE - Temasek Holdings is selling its majority stake in Indonesian Bank Danamon to Japan's largest lender Mitsubishi UFJ Financial Group (MUFG).

Under the deal, MUFG will acquire Temasek unit's 73.8 per cent stake in Danamon in three parts, with an initial acquisition of 19.9 per cent stake at 8,323 Indonesian rupiah apiece or 15.875 trillion Indonesian rupiah (S$1.58 billion).

The Japanese lender will further seek regulatory & relevant approvals to buy additional 20.1 per cent to increase stake in Danamon to 40 per cent.

It will eventually seek necessary approvals to increase stake beyond 40 per cent, a stipulated ceiling that stymied DBS Group Holdings' ambition previously.

MUFG said it aimed to buy up to 100 per cent in Danamon, which would value the deal at more than US$6 billion, and had been in contact with Indonesian regulators.

"We have long recognised Indonesia's role as one of the key drivers of the region's development and have sought to establish a stronger presence in the country," MUFG's chief executive for Asia and Oceania region Takayoshi Futae said in a statement on Dec 26.

In 2013, DBS had attempted to buy a controlling stake in Danamon. But it was thwarted after Indonesia changed laws to restrict single ownership in banks to 40 per cent.

However, Indonesia can relax the ceiling on special grounds, such as if the investing bank is financially strong.

Acknowledging the deal, Temasek president and head of Southeast Asia Tan Chong Leesaid in a statement on Dec 26 that MUFG is well positioned to complement Danamon's franchise and lead the bank forward into its next phase of growth, given its strong Indonesian franchise for corporate lending and infrastructure financing.

"We believe that MUFG's interest in Danamon is testament to their confidence in the bank and that the combination will also be well aligned with Indonesia's development and growth objectives," he noted.

Mr Tan added that it will work closely with MUFG "to support Danamon during this period to enhance value to Danamon's key stakeholders, including its customers and employees, and to lead the bank forward into its next phase of growth".

Temasek continues to be invested in Indonesia, across a range of sectors including consumer, real estate, as well as emerging trends in technology and financial services.

Given the regulatory reforms and steady growth in Indonesia, Temasek remains highly optimistic about investment opportunities in the country, said Mr Tan.