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HSBC to buy all public shares in Bank Ekonomi starting in June
London-based lender HSBC Asia Pacific Holdings (UK) Limited will buy all public shares in its subsidiary Bank Ekonomi in an effort to delist it from the Indonesia Stock Exchange (IDX)
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London-based lender HSBC Asia Pacific Holdings (UK) Limited will buy all public shares in its subsidiary Bank Ekonomi in an effort to delist it from the Indonesia Stock Exchange (IDX).
In an announcement published on the IDX on Friday, HSBC said it planned to purchase the 1.72 million shares currently owned by the public. These shares represent 0.06 percent of Bank Ekonomi's enlarged shares.
HSBC hopes to carry out the tender offer from June 5 to July 4. The tender process will see HSBC pay up to Rp 17.18 billion (US$1.31 million) for the share purchase, since it is offering to buy the public's shares at Rp 10,000 apiece.
The offered price is more than four times Bank Ekonomi's stock price last traded at Rp 2,100 apiece before the IDX suspended the bank's public shares from IDX trading on Feb. 17.
The tender offer price was initially set at Rp 6,300 apiece, but was jacked up to Rp 10,000 after Bank Ekonomi held an extraordinary general shareholders' meeting on May 12 to gain approval for the move.
It claims that shareholders will benefit from the new price because it is more than four times higher than the highest trading price recorded in the 90 days preceding the plan to delist was officially announced on April 2. During that period, the highest price was Rp 2,250 per share.
The new price is also more than three times higher than the highest price reported during regular trading activities within the past two years, which was Rp 2,922 apiece.
Shareholders wishing to retain ownership in Bank Ekonomi may choose not to sell their stake and eventually become owners of a private company, the announcement says.
At the moment, HSBC controls 2.64 billion shares or 98.94 percent of Bank Ekonomi's enlarged shares.
HSBC took over control of Bank Ekonomi from its previous owners ' PT Lumbung Artakencana, PT Alas Pusaka and other individual shareholders ' when it completed majority share acquisition in 2009 that was reportedly worth $600 million.
It has previously expressed its intention to pull Bank Ekonomi off the stock market due to its illiquid share trading activities, but the move is also seen as a way to consolidate Bank Ekonomi and HSBC's Indonesia branch.
The consolidation proposal itself has been submitted the Financial Services Authority (OJK).
HSBC Indonesia managing director Ali Setiawan said that the new entity that emerged from the consolidation would list its shares on the IDX after all procedures were completed.
Meanwhile, latest data show that Bank Ekonomi had Rp 30.75 trillion in total assets at the end of the first quarter, while HSBC Indonesia controlled Rp 98.24 trillion in assets.
During the first three months of the year, Bank Ekonomi's outstanding loans grew 6.2 percent year-on-year to Rp 20.21 trillion and its customer deposits rose 8.3 percent year-on-year to Rp 24.21 trillion. It ended the period with a net interest margin (NIM) of 3.1 percent and Rp 19.87 billion in net profit.
HSBC Indonesia, on the other hand, posted 20.8 percent annual increase in loans to Rp 60.72 trillion outstanding and 5.6 percent annual customer deposits growth to Rp 52.94 trillion during the January to March period. It bagged Rp 404.97 billion in net profit and booked 4.6 percent in the NIM rate.
