Rescue Plan for Indonesia Insurer Bumiputera Falls Through
A rescue plan for Indonesian life insurer Bumiputera has collapsed after it failed to agree with Evergreen Invesco – its planned white knight – over the size of a capital injection.
Evergreen had been due to acquire a holding company for Bumiputera, which has more liabilities than assets and operates under the control of Indonesia’s Financial Services Authority (OJK), by raising billions of dollars through a rights issue.
Financial authorities have been keen to resolve Bumiputera’s woes without government funds, scarred in part by the public furore that erupted over a taxpayer bailout of lender Bank Century in 2008.
Evergreen had wanted to inject capital in stages into the planned holding company for century-old insurer over a 14-year period, Adhie Massardi, a Bumiputera manager, told Reuters, adding that the life insurer had wanted a sizable amount of funding immediately.
Calls by Reuters to Evergreen’s office were not answered and there were no replies to emailed requests for comment.
Evergreen, which has a market value of just $110 million, had one stage wanted to raise up to Rp 40 trillion ($2.9 billion) through the rights issue although it later changed that figure to Rp 10.3 trillion. The deal would have resulted in a backdoor listing for Bumiputera.
Bumiputera is a mutual insurance company owned by its 6.7 million policyholders, who are mainly Indonesian civil servants.
Its assets were worth Rp 11 trillion at the end of 2017 – more than half in the form of property, while liabilities stood at Rp 28 trillion, according to management.
Indonesian tycoon, Chairul Tanjung, a former minister who controls CT Corp, said last month he was interested in buying Bumiputera’s property assets. Adhie said Chairul has expressed his interest, but nothing has been decided.
The House of Representatives is scheduled to hold a hearing with the OJK to further discuss Bumiputera’s prospects next week.
Courtesy : JakartaGlobe , cnnindonesia.com
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