A Standard Chartered Plc affiliate, Qatar Islamic Bank SAQ and Oversea-Chinese Banking Corp. are among bidders for a controlling stake in PT Bank Muamalat Indonesia, the country’s oldest Islamic bank, people with knowledge of the matter said.
Shareholders of privately held Bank Muamalat plan to sell more than 50 percent of the lender in a deal that may value it at as much as $600 million, one of the people said, declining to be identified because the talks are private. Second-round bids are due in mid-June, the people said. PT Bank Permata, an Indonesian lender 45 percent owned by Standard Chartered, is bidding for the stake, one person said.
“It makes sense to address this segment in a big and proper way,” Sanjay Jain, a Singapore-based analyst at Credit Suisse Group AG, said of Islamic banking. “If you’re a player in southeast Asia, you’ve got to be in this segment.”
Rising demand for Islamic banking services helped drive the Jakarta Finance Index 52 percent higher in the past 12 months. Islamic banking assets in Indonesia, Southeast Asia’s biggest economy, grew to 100 trillion rupiah ($11.7 billion) last year from 67 trillion rupiah at the end of 2009, Mulya Siregar, the head of Shariah banking at the central bank, said in January.
Investors in Bank Muamalat may sell as much as 80 percent of the lender, according to one person.
Bank Muamalat has almost 400 offices in Indonesia and a branch in Malaysia. The lender plans to quadruple its holdings of Shariah-compliant debt this year, Chief Financial Officer Hendiarto said in a February interview. The company had about 20.4 trillion rupiah of assets as of December and targets asset growth of 50 percent this year, according to Hendiarto, who goes by one name.
Hendiarto declined to comment on bidders for the stake. Spokespeople for Standard Chartered, Oversea-Chinese, Bank Permata and Qatar Islamic Bank declined to comment.
Indonesia is the Asia-Pacific regions third-most populous country with about 237 million people, 85 percent of whom are Muslim, the most of any nation. Demand for banking services that comply with Shariah law is increasing by about 15 percent a year and Islamic assets may reach $1.6 trillion by 2012, according to the Kuala Lumpur-based Islamic Financial Services Board.
Companies on the 70-stock Jakarta Finance Index trade at an average 2.47 times book value, compared with 1.9 times for Chinese lenders traded in Hong Kong, according to data compiled by Bloomberg.
London-based Standard Chartered got more than half of its pretax profit from the Asia-Pacific region last year, Bloomberg data show. The company hired Sanjeeb Chaudhuri from Citigroup Inc. as head of consumer banking for South Asia, two people with knowledge of the matter said this month.
The U.K. lender offers Islamic-banking services in Indonesia through its Standard Chartered Saadiq unit, and has 26 branches in the country. It also owns the stake in Bank Permata, a lender with 280 branches in Indonesia, according to Standard Chartered’s annual report.
Bank Permata shares advanced 0.6 percent to 1,690 rupiah today at 11 a.m. in Jakarta. The stock has fallen 5.6 percent this year.
Qatar Islamic Bank, the country’s biggest Shariah-compliant lender, owns stakes in U.K., Malaysian and Lebanese lenders and may enter the Indonesian and Turkish markets, acting Chief Executive Officer Ahmad Meshari said in a May 12 interview.
Oversea-Chinese, Singapore’s second-largest lender by market value, merged its two bank subsidiaries in Indonesia this year. Bank OCBC NISP, in which the Singaporean lender has an 85 percent stake, had assets of 50.15 trillion rupiah at the end of last year, according to Oversea-Chinese’s annual report.
Bank OCBC NISP opened three Shariah banking branches in Jakarta, Bandung and Surabaya. Together with additions of conventional bank branches, its overall network in the country increased to 409 from 382.
Countries including Turkey, South Africa and Thailand are easing barriers to Islamic finance products to tap rising demand for such services. The world’s Muslim population is expected to increase by about 35 percent to 2.2 billion by 2030, with Asia accounting for 59 percent of the total, according to the Pew Research Center.