I

ndonesian conglomerate Bosowa Corporation announced on Monday that it was increasing its stake in mid-sized lender Bank Bukopin (BBKP) to expand its financial wing.

Bosowa, founded by renowned businessman Aksa Mahmud, who is also former deputy speaker of the People'€™s Consultative Assembly (MPR) from the Golkar Party, expects its ownership to increase to 30 percent from the current 18.57 percent, the company announced.

No details were immediately available on the share price agreed to by Bukopin and Bosowa.

Bukopin'€™s shares were traded at Rp 655 (5 US cents) on the Indonesia Stock Exchange (IDX) on Monday, a 4 percent surge a day after the purchase announcement.

The additional 11.43 percent shares are equal to 1.04 billion shares, which were currently owned by the State Logistics Agency Workers Cooperative (Kopelindo).

The deal is subject to approval from Bukopin'€™s shareholders and the Financial Services Authority (OJK). If approved, Kopelindo will see its ownership reduced to 18.09 percent from 29.52 percent at present.

The remaining stake will compose of the investing public with 40.48 percent ownership and the Indonesian Republic at 11.43 percent.

Bosowa president director Erwin Aksa said the group would use internal cash to finance the share acquisition.

'€œOur cash position is strong,'€ he said in a telephone interview.

Bosowa had Rp 820.11 billion in cash and cash equivalents by the end of 2013, according to the group'€™s latest data. Total assets stood at Rp 12.06 trillion and equities amounted to Rp 5.72 trillion.

Bosowa managing director Sadikin Aksa said that the planned acquisition would enable Bosowa to expand in the micro-, small- and medium-scale market, especially in the central and eastern parts of Indonesia.

The group, stemming from Makassar, South Sulawesi, is currently one of few major players in the regions with its nine business sectors, including cement, automotive and finance.

Its cement business, which is operated by PT Semen Bosowa Maros and PT Semen Bosowa Indonesia, now runs on an annual combined capacity of 5.2 million tons to 5.5 million tons.

In finance, the group now runs several companies, such as insurance firm PT Asuransi Bosowa Periskop, brokerage firm PT Royal Trust Capital and multfinance firm PT Sadira Finance.

Bosowa also has a 20.12 percent stake in publicly listed lender Bank QNB Kesawan through PT Bosowa Kapital.

Bosowa is expected to provide funds to strengthen Bukopin'€™s capital, as the lender hopes to become one of the 10 most profitable banks in Indonesia by 2016.

According to its 2013 financial report, Bukopin reaped Rp 934.6 billion in net profits, a 12 surge year-on-year. Its total outstanding loans were up 6.6 percent to Rp 48.5 trillion and its total deposits climbed 3.3 percent to Rp 55.8 trillion.

By the end of last year, Bukopin'€™s total assets reached Rp 69.46 trillion, while its liabilities and equities stood at Rp 63.25 trillion and Rp 6.21 trillion, respectively.

With core capital of Rp 5.05 trillion, it is now considered a lender under the BUKU III category, meaning that the bank has full license to operate in this country and is able to expand in the region.