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Astra invests $259 million in BJJ to form digital bank
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iversified conglomerate Astra International has completed a transaction to acquire a stake in private lender Bank Jasa Jakarta (BJJ) for Rp 3.88 trillion (US$259 million) with a view to forming its own digital bank.
The transaction was done through Astra subsidiary PT Sedaya Multi Investama, also known as Astra Financial, alongside WeLab Sky, a consortium led by Hong Kong-based fintech platform WeLab, with each entity to own 49.56 percent of BJJ.
“BJJ as a digital bank will complement many financial products and services that we could offer to our customers,” Astra financial director in charge Suparno Djasmin said in a statement on Monday.
Read also: Higher interest rates make life harder for APAC digital banks: Fitch
Astra’s acquisition comes after a wave of new digital banks in the country, like GoTo-backed Bank Jago, CT Corp-backed Allo Bank and Sea Group-backed Sea Bank. Digital banks have gained traction in Indonesia, where their investors look to capitalize on the country’s large market with consumers who are accepting of the fintech industry.
Simon Loong, founder and group CEO of WeLab, said the acquisition would allow the fintech firm to expand its digital bank services beyond Hong Kong. In 2018, WeLab partnered with Astra to form a fintech lending company, PT Astra WeLab Digital Arta.
“Our partnership with Astra will support our strategic focus to increase our cooperation and business with partners in expanding the scale and reach to strengthen our network in pan-Asia fintech platforms,” Simon said in the same statement.
Ibrahim Kholilul Rohman, senior research associate at think-tank IFG Progress, expects the newly acquired bank to aid Astra’s business internally within its group by facilitating payments, digitizing its systems or acting as a payment gateway, among other possibilities.
“So, this new digital bank will help within Astra’s internal [group] before they utilize it to overcome what lies beyond its own group,” Ibrahim told The Jakarta Post on Monday.
Ibrahim said Astra had several options, whether to make use of the new digital bank for retail or business-to-business (B2B) transactions, adding the latter may be an alternative option should Astra find it difficult to pierce through the already established banking industry, as all banks, including conventional ones, had been digitizing their business aggressively.
“Astra has experience in almost every economic sector that would enable them to reach B2B as a new customer, or even as a niece market,” Ibrahim said.
Read also: Astra International revenue up 34% in H1
Nailul Huda, who heads the Center of Innovation and Digital Economy at the Institute for Development of Economic and Finance (Indef), said Astra was no stranger to the financial industry, pointing to its footprint in the multi-finance business as seen in Astra Financial, which has PT Federal International Finance (FIF Group) as a subsidiary.
This includes digital wallet Astra Pay and private lender Permata Bank, the latter of which was sold to Bangkok Bank two years ago.
Nailul expects the newly acquired bank to help Astra in its multi-finance business, particularly to provide loans for vehicles.
“Astra may not have a wide online ecosystem like many existing players, but Astra has a strong offline ecosystem with a wide variety of merchants under its group,” Nailul told the Post on Monday.
