Icahn, Pickens, Goldsmith...Widjaja?
Indonesian businessman Yopie Widjaja bought his first taxi cab two decades ago while still a student. Since then he has acquired 10 taxi fleets, a logging venture abroad, a stake in Jakarta's future $2 billion subway line, and quite a reputation. Widjaja, you see, has a lucrative sideline: making hostile bids for companies. "He's known as the T. Boone Pickens of Indonesia," says Matt Courtnage, analyst at brokerage H.G. Asia Ltd.. "He's very aggressive."
Meet Indonesia's first corporate raider. Widjaja's pit-bull tactics have broken the unwritten rules of conduct in the get-along inner circles of Muslim businessmen in Jakarta. Yet he has developed a following of Jakarta investors who mimic his every buy and sell. In his two latest forays, he has acquired controlling stakes in publicly traded banks, driven up the share prices, and then sold out at a handsome profit when shocked regulators and founding families chased him out. Widjaja, 40, is breaking no laws, but he's shooting holes through Indonesia's taboos. "Hostile takeovers are not very well received in Asia because of our culture," he explains. "Most deals are done by `friendly' business, with the assistance of management."
Widjaja's relative freedom to maneuver couldn't happen without the silent assent of powerful partners related to Indonesian President Suharto, whose family permeates the business world. Widjaja's transportation company, Steady Safe, with modest sales of $45 million in 1995, is one of 13 in a consortium led by Bambang Trihatmodjo, one of Suharto's sons, to build the Jakarta subway. Widjaja also has 60% of a logging joint venture in Cambodia with Suharto's daughter Siti Hedijati Hariyadi, known as Titiek.
Even when he tangles with the regulators, Widjaja manages to stay ahead. When he acquired a 20% controlling interest in Bank Papan Sejahtera in 1995, Widjaja found himself blocked by Bank Indonesia, the central bank. The unwritten rule was that Bank Indonesia reserved the right to approve the management of local banks. "Everybody woke up one morning and found that a taxi and bus company owned an Indonesian bank. Bank Indonesia knew nothing about it, and everyone was very embarrassed," says one bank executive.
In Indonesia, such moves are usually reserved for those even better connected than Widjaja. So Bank Indonesia's directors found what they called a more "acceptable" investor to buy out Widjaja's stake: Hashim Djojohadikusumo, the brother-in-law of Suharto's daughter Titiek as well as the brother-in-law of central bank Governor Sudradjat Djiwandono. Widjaja walked away from the Bank Papan takeover with a $13 million profit. He made a comparable killing last August on another target, Bank Mashill, forcing the bank's own brokerage to snap up shares in order to keep the founders in control. Widjaja isn't telling, but brokers estimate his profit at up to $20 million.
Widjaja claims he's not just out to make a quick killing. Had it been up to him, he says, he would have held on to both Bank Mashill and Bank Papan, restructured them, made them more profitable and shareholder-friendly, and sold them off later at an even higher price. "I'm not just trying to get profit out of it," Widjaja says.
VULNERABLE BANKS. Meanwhile, he plans a $300 million expansion of his transportation company, with new buses, ferries, and second-hand Japanese commuter trains to provide the first express service between Jakarta and its suburbs. He intends to finance part of the upgrade from his takeover profits as well as from a rights issue.
Other banks will undoubtedly attract Widjaja's attention. A government-ordered cleanup of the financial system is squeezing small, illiquid banks for cash. In a country with 20% interest rates, floating equity is by far the cheapest way for a struggling bank to raise funds, making the financial institutions vulnerable to takeover.
Widjaja probably won't spawn many imitators in the region. "I don't think hostile takeovers are a trend that we'll see mushrooming in Asia over the next 5 to 10 years," says Mark Dowie, head of mergers and acquisitions at Jardine Fleming Ltd. in Hong Kong. Most traded Asian companies are controlled by family interests that don't float enough stock to make hostile takeovers possible. But in his own corner of the world, this Indonesian Pickens has proven that a raider can flourish.