F

inancial services and investment firm Capital Financial Indonesia expects to expand to new sectors as it seeks fresh funds from an initial public offering (IPO).

The group, established in 2009, operates a number of businesses in the life insurance and asset management sectors through its subsidiaries Capital Life Insurance and Capital Asset Management, respectively. It also indirectly owns stake in private lender Bank Capital Indonesia through Capital Asset Management and investment firm Inigo Global Capital.

With fresh capital raised from its IPO, the group expects to establish two more subsidiaries, namely sharia life insurer Capital Life Syariah and venture capital Capital Global Ventura, its executives say.

The company has obtained a permit from the Financial Services Authority (OJK) for its new venture capital subsidiary, which is expected to start operating in the fourth quarter.

“We decided to start building a venture capital because there are a lot of creative entrepreneurs who own businesses with big sales volume, but can’t yet access bank loans,” president director Hengky Setiono said during the company’s debut on the Indonesian Stock Exchange (IDX) on Tuesday.

The company has prepared Rp 52.5 billion (US$4.01 million), part of the amount it raised from the IPO, to be injected into the new venture capital in compliance with the minimum set at Rp 50 billion in an OJK regulation.

He said the future venture capital could provide alternative funding for the entrepreneurs, who are mostly youngsters, as they were deemed ineligible to obtain bank loans despite their popularity and endorsements from the government.

The company believes young entrepreneurs, particularly those who own tech businesses, have big potential, as almost all of them market their app-based products digitally and manage trillions of rupiah in transactions.

He said the company had yet to set a specific target for prospective businesses that would act as its venture capital’s partners. However, he hinted that some of the prospective entrepreneurs were those that had previously been deemed as ineligible for loans from Bank Capital.

Capital Financial Indonesia’s independent director and corporate secretary, Maliana Herutama Malkan, said preparations for the new venture capital’s operations would take considerable time before its launch in the fourth quarter.

“We have been monitoring young entrepreneurs, particularly those in the app-based tech business. However, we are focusing on getting ready for operations,” he said.

The group expected to raise Rp 715 billion by divesting to the public its 5.5 billion shares, or equal to 47.61 percent of its total capital. At the same time, it issued 2 billion series I warrants, with four warrants to be given to investors holding 11 new shares.

Ninety two percent of the funds raised from the IPO will be injected as capital for its life insurance subsidiary, while 7.45 percent will be used to build Capital Life Syariah and injected to the venture capital. The remainder will go to working capital for the group.

Securities house Sinarmas Sekuritas acted as the IPO’s managing underwriter, while Jasa Utama Capital, Phillip Securities Indonesia, Valbury Securities, Yulie Sekurindo, Panin Sekuritas and Erdikha Elit Sekuritas acted as joint underwriters.

Hengky said the group poured most of the funds raised to its life insurance subsidiary, as it saw big potential to grow amid small insurance penetration of below 2 percent.

—JP/Grace D. Amianti