GIC reportedly buying 9% of Indonesia's Bank Jago to tap Digital Banking Business

Singapore sovereign wealth fund GIC will purchase a stake in Bank Jago, a publicly listed Indonesian lender that is set to become the first fully digital bank in Southeast Asia's largest economy, a rights issue prospectus shows.

GIC will spend as much as 3.15 trillion rupiah (SGD294 million) to acquire about 9% of Bank Jago's enlarged capital through a rights issue slated for March, according to a prospectus filed to the stock exchange by the Jakarta-based bank, The Straits Times said in a news report, written by Wahyudi Soeriaatmadja.

GIC declined to comment when contacted by The Straits Times, read the news story.

Arief Harris Tandjung, Deputy CEO, Bank Jago, said: “The more the shareholders, the more transparently Bank Jago will be run and the better the corporate governance as there are more parties watching the management.”

Bank Jago will hold a one-for-3.6 rights issue, which gives investors the right to buy one new share for every 3.6 existing shares that they own.

The proceeds from the rights issue will be used to boost Bank Jago's capital to about 8 trillion rupiah, from about 1 trillion rupiah currently, reports The Straits Times.

According to Kharim Siregar, CEO, Bank Jago, stated that about 97% of the expected fresh funds injected into the bank's capital will be channelled to finance business expansion, 2% to develop information technology infrastructure and one per cent to develop the bank's human capital.

Bank Jago's existing major shareholders that collectively hold a 51% stake - Metamorphosis Ecosystem Indonesia and Wealth Track Technology - will use only part of their rights to buy new shares in the rights issue, having committed to transfer such rights to GIC and other foreign institutional investors.

Metamorphosis Ecosystem is mainly owned by veteran Indonesian banker Jerry Ng. Wealth Track is owned by Patrick Walujo, who is also the Co-Founder of Northstar Pacific Partners, an Indonesian private equity firm backed by TPG Capital.

Bank Jago recently entered into a strategic partnership with ride-hailing and digital payment services firm Gojek.

In December 2020, Gojek spent USD160 million (SGD213 million) to raise its stake in Bank Jago to 22.16%.

This will eventually see Jago's digital banking services being offered on Gojek's super-app platform, allowing Gojek's millions of users to instantly open a bank account, for instance, and manage it on the app, writes Soeriaatmadja.

Indonesia's financial watchdog OJK is set to outline by the middle of 2021 how digital banks should operate in the country, Anung Herlianto, its executive director of banking research and regulation.