TOKYO -- Bank of Tokyo-Mitsubishi UFJ has agreed to purchases that lead to a majority stake in Indonesia's Bank Danamon, a deal potentially worth 700 billion yen ($6.18 billion) in a country that normally restricts foreign investors to minority ownership of banks.
The acquisition will be conducted in three stages, BTMU said Tuesday. The Japanese megabank will spend 133.4 billion yen to acquire the initial 19.9% stake from affiliates of Singaporean state wealth fund Temasek Holdings by Sunday. An additional 20.1% will be added around the middle of next year.
Once it obtains approval from Indonesian authorities, BTMU will lift ownership to over 73.8%, with a tentative goal of converting Bank Danamon into a consolidated subsidiary in 2019. The total price tag looks to be the most a Japanese bank has spent on an offshore acquisition.
Indonesia usually caps single foreign ownership of lenders at 40%, but allows exceptions under certain conditions. Only a few domestic banks fall under foreign majority ownership.
BTMU positions Jakarta-based Bank Danamon, Indonesia's fifth-largest bank by market capitalization, as the gateway to a growth market that offers Southeast Asia's largest population. The Mitsubishi UFJ Financial Group unit has been increasing acquisitions in Southeast Asia, including targets in Thailand, the Philippines and Vietnam.