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Indonesian government will not participate in Bank Bukopin rights issue

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Indonesian government will not participate in Bank Bukopin rights issue

PT Bank Bukopin Tbk said the Indonesian government is not participating in the bank's rights issue, expected to take place in June or July.

In an email response to S&P Global Market Intelligence, the bank said the government will give its rights to buy shares of Bank Bukopin to parties other than its existing shareholders. Further, the bank said any plan by the government to sell its entire 11.43% stake in Bank Bukopin would only happen if it gets the approval from the People's Representative Council, or DPR.

The Indonesian bank has submitted a filing for the rights issue to the Financial Service Authority, the Jakarta Post reported May 11, citing President Director Eko Rachmansyah Gindo.

The bank plans to issue new shares to raise up to 2 trillion Indonesian rupiah in the rights issue, news outlet IDNFinancials reported May 3. Proceeds of the issue will go toward strengthening the bank's capital levels and boost its capital adequacy ratio, which stood at 11.09% as of the first quarter.

Gindo added that potential investors have begun the due diligence process. South Korea's KB Kookmin Bank and private equity firm CVC Capital Partners Ltd. were previously reported to be interested in taking part in Bank Bukopin's proposed rights issue. Both potential investors have conducted preliminary due diligence and signed a nondisclosure agreement, IDNFinancials reported.

In total, four entities are interested in participating in the rights issue, the report said, citing Adhi Brahmantya, the bank's finance director.

KB Kookmin Bank is owned by KB Financial Group Inc.

As of May 11, US$1 was equivalent to 13,980.00 Indonesian rupiah.