Indonesia's Bank Rakyat Said to Scrap $500 Million Insurer Sale

  • Hong Kong billionaire Li, Hanwha Life, BNP had bid for stake
  • Most profitable Indonesian lender started auction last year

PT Bank Rakyat Indonesia, the country’s most profitable lender, has canceled the sale process for a 40 percent stake in its life insurance arm, people with knowledge of the matter said.

The state-controlled bank will try to boost the business’s value internally before any future sale, the people said, asking not to be identified as the details are private. Hong Kong billionaire Richard Li’s FWD Group, South Korea’s Hanwha Life Insurance Co. and BNP Paribas Cardif were vying for the holding, valued at $400 million to $500 million, in an auction process that started nearly a year ago, the people said.

Indonesian companies were involved in $3.7 billion of acquisitions last year, down 64 percent from 2014, according to data compiled by Bloomberg. The Bank Rakyat unit, known as BRIngin Life, sells products through the lender’s 10,000 outlets across Indonesia. 

The state lender agreed to take direct ownership of BRIngin Life from its pension fund last year in preparation for the introduction of a foreign partner. It shortlisted bidders in July and initially planned to choose a winner in September, people with knowledge of the matter said previously.

Optimizing Performance

Bank Rakyat told bidders it may restart the sale in the future, the people said. The life insurance unit, whose full name is PT Asuransi Jiwa Bringin Jiwa Sejahtera, increased its net income 76 percent in 2014 to 410.4 billion rupiah ($29.5 million).

“We want to optimize BRIngin Life’s performance,” Hari Siaga, Bank Rakyat’s corporate secretary, said by phone Friday. “We aren’t thinking about a partner just now -- that would be a second step.”

Bank Rakyat shares rose 2.7 percent to 11,550 rupiah at 2:23 p.m. in Jakarta. A spokesman for Hanwha Life said he couldn’t immediately comment, while representatives for FWD and BNP Paribas declined to comment.

Hanwha Life, South Korea’s oldest insurer, operates in China, Vietnam and Indonesia. FWD, which is part-owned by Swiss Re AG, is part of Li’s Pacific Century Group. It was formed when the billionaire bought ING Groep NV’s insurance and pension units in Hong Kong, Macau and Thailand for 1.64 billion euros ($1.8 billion) in 2013.

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