During the rights issue in May, the German company, one of Europe’s largest development finance institutions, bought about 20 percent of the publicly listed financing company’s shares in a transaction worth Rp 51.68 billion (US$3.88 million), making the German company the second-largest shareholder in Verena.

After the rights issue, private lender Panin Bank maintains its controling position with a stake of 57.54 percent. Other shareholders are Verena Capital with 9.44 percent and the public with 13 percent.

“The rights issue was an important step to strengthen our capital structure to support our business plan. With a stronger financing capacity, we will be able to compete with bigger firms,” Verena president director Andi Harjono said at a press conference in Jakarta on Friday.

During the rights issue, Verena, which focuses its financing services on used car purchases, raised a total of Rp 177.31 billion.

The fresh funds injected by the German company and other shareholders during the rights issue would be used to support Verena’s plans to expand its leasing services to five more cities in Indonesia, including Medan in North Sumatra as its main target, Andi said.

“Out of the other cities we are currently surveying, Medan is showing the biggest business potential,” he said. “We are hoping to be able to open satellite branches there by the end of the year.”

At present, most of the company’s offices are located in Greater Jakarta, with some branches in Central Java, East Java and Aceh. As of now, Andi explained that opening a satellite branch would not be as costly as opening a full branch. A satellite office assists the branch office in collecting installments and marketing products in specific area, but the financing approval must come from the branch office.

“A satellite office only costs Rp 400 million at most, compared to Rp 2 billion needed on average to establish a full branch,” Andi said, adding that the company had allocated Rp 1.5 billion to fund the expansion this year.

Verena’s net profit soared by about 75 percent in 2016 to Rp 2.34 billion from Rp 1.34 billion in 2015, despite a fall in the company’s revenue. Nevertheless, profit remains far below the Rp 24.35 billion achieved in 2014.

Revenue, which fell from Rp 393 billion in 2014 to Rp 379 billion in 2015, continued to decline to Rp 336 billion in 2016.

“We prefer to keep focusing on our financing capabilities,” he said, adding that the company had disbursed Rp 600 billion to Rp 700 billion for financing in the first half of this year.

The company targets to disburse finance amounting to Rp 1.5 trillion, which would mark a 25 percent increase from last year’s Rp 1.2 trillion.

DEG spokesperson Susanne Decker, who was also present at the press conference, said it was not unusual for the firm to choose Indonesia, as an emerging market, to expand its investment.

“Indonesia is a large country with a growing population and economy. We see Indonesia as an important spot, and we are thankful to have found a reliable partner here,” said Decker.

Aside of Verena, DEG in Indonesia has also given $30 million to Panin Bank in the form of senior loans. It has also provided Rp 278 billion in equity to Bank Victoria. The company’s investment in Asia totaled €2.78 billion ($3.24 billion) in 2016. (dea)

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