South Korean Kookmin Completes Takeover of Historic Indonesian Bank

Jakarta. KB Kookmin Bank has closed a private placement deal for majority shares in Bank Bukopin, an Indonesian listed midsize lender, this week, completing a takeover that put South Korea's largest lender as the controlling shareholder in the historic local lender. 

"KB Kookmin Bank has become the sole controlling shareholder of the company which owns 67 percent of the total number of shares issued in the company, " Bank Bukopin said in a statement on Friday. 

The move came after months of grueling process amid resistance from another controlling shareholder, the politically connected Bosowa Group. 

Kookmin closed a deal worth Rp 3.1 trillion on Wednesday, Bank Bukopin said in the statement. The lender acquired 16.4 billion shares at Rp 190 apiece, which equates to a 32 percent discount to BUkopin's share price at the Indonesia Stock exchange on the day. 

The additional equities from Kookmin would help strengthen Bukopin's financial performance. The lender net income reached its peak at Rp 1 trillion in 2016 then plunged by more than 88 percent in the subsequent year and has yet to reach the same height since then.   

Rivan A. Purwantono, Bukopin's president director, told the Globe's sister publication Investor Daily said that Kookmin's private placement would increase Bukopin's capital adequacy ratio to 17 percent, a measure of its ability to absorb losses, from 12.6 percent at the end of last year. 

Bukopin was established in 1970 as Bank Umum Koperasi Indonesia, a cooperative lender. It changed its name into Bank Bukopin in 1993 as the lender become a limited liability company. 

Kookmin first became Bukopin's shareholder in 2018 after a Rp 1.4 trillion right issue aimed to improve the lender's liquidity. At the time Kookmin bought 22 percent shares in the local lender. 

But late last year, it became apparent that Bukopin needed another liquidity boost, so the lender's announced a plan to hold another funding round. The Financial Services Authority (OJK) invited Bukopin's major shareholders, to discuss a plan to prop up the iconic lender. 

Kookmin said in June its commitment to Bukopin and express its interests to acquire 67 percent of Bukopin shares through a series of right issue and private placement. OJK's approval of the plan was reflective of the country's more welcoming stance to foreign investors in its banking industry. 

So, Bukopin held the right issue in July and managed to raise Rp 839 billion. Kookmin, which acted as a standby buyer in the issuance, boosted its holding to 33.9 percent shares after the right issue, Bosowa Corporindo with 23.4 percent.

Bukopin then held an extraordinary shareholder's general meeting on Aug 25 in which Kookmin secured the shareholders' approval of its private placement plan.

OJK, however, barred Bosowa Corporindo that still owns 23.4 percent in Bukopin from casting its vote in the meeting. Bosowa said it would go to the court to challenge the decision.