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tate-owned Bank Mandiri will form a joint financial venture with two local automotive distribution companies, ASCO Automotive and Tunas Group, in order to tap into the growing financing business in the automotive sector, especially for the purchase of motorcycles.

Mandiri president director Budi Gunadi Sadikin said that the planned joint venture, which is to be named Mandiri Utama Finance, would focus its business on financing purchases of motorcycles and used cars.

'€œThis joint venture will open up the way for us to enter the motorcycle financing segment, in which we are currently not involved. It is a business with growing demand every year,'€ he said.

Mandiri, ASCO and Tunas recently signed a shareholders'€™ agreement in which Mandiri is slated to control a 51 percent stake in the new unit, while ASCO and Tunas will hold 37 percent and 12 percent, respectively.

The lender has submitted its JV plan to the Financial Services Authority (OJK) and is waiting for the regulator'€™s approval. '€œWe hope to get it up and running as early as January 2015,'€ Budi said, adding that Mandiri Utama Finance would have around Rp 200 billion (US$16.55 million) in capital.

ASCO is an automotive dealer in brands such as Daihatsu, Isuzu, Peugeot and UD Trucks. It was founded by businessmen Theodore '€œTeddy'€ Permadi Rachmat and Stanley Setia Atmadja. Teddy and Stanley are also co-founders of major automotive financing firm Adira Dinamika Multi Finance, which is currently owned by lender Bank Danamon. Budi himself was a director of Adira Quantum Multifinance '€” formerly a subsidiary of Adira Dinamika '€” in 2004.

Tunas, on the other hand, deals in brands including Toyota, Daihatsu, BMW, Peugeot, Honda Motor and Isuzu.

The company '€” founded by Anton Setiawan '€” now manages several business units and subsidiaries, including financing firm Mandiri Tunas Finance (MTF), a joint venture with Mandiri.

At the moment, MTF heavily focuses its business on car financing and has a small portfolio in the high-end motorcycle segment. Budi said that the lender had no plan to merge the new JV with MTF. '€œWe need two separate business units to really grow our financing business,'€ he added.

According to MTF'€™s latest financial report, its total financing reached Rp 10.78 trillion by the end of September and the firm claims to control a 12.9 percent share in Indonesia'€™s new-car market.

Contacted separately, Stanley said that the new JV would benefit from the synergy created among the three companies.

'€œThis multifinance firm will have a solid funding source with a bank as its parent company. For the bank itself, it will be able to distribute loans even more widely,'€ he said, adding that a similar system was applied within Adira.

Meanwhile, Anton said that the new JV would provide additional income for Tunas Group. '€œWe are looking to tap into the motorcycle market, which continues to expand from year to year,'€ he told The Jakarta Post.

The Indonesia Motorcycle Industry Association (AISI) estimates that motorcycle sales will rise by 10 percent in 2015 despite a planned increase in the price of subsidized fuel.

Latest industry data show that total motorcycle sales stood at 6.05 million units as of September. The full year figure is expected to grow to at least 8.51 million units, 10 percent higher than in 2013.