Indonesian tech giant Bukalapak will subscribe to a planned 4.8 trillion rupiah (US$335 million) rights issue by local lender Allo Bank, the bank said in a statement to the Indonesia Stock Exchange on Monday.
Grab and Carro, both based in Singapore, are also participating alongside Bukalapak through their own affiliates.
Allo Bank, controlled by local tycoon Chairul Tanjung, is planning to sell more than 10 billion shares at 478 rupiah per share from Jan 13 to 19.
After the transaction, Bukalapak will hold 11.49% of the lender while Grab and Carro, both through separate affiliates, will hold 2.07% and 0.69%, respectively.
Bukalapak is a major e-commerce player in Indonesia. Grab provides a super app in Southeast Asia, while Carro is an online used car sales platform.
The bank’s share price today closed 24.3% above its 2021 finish. It surged more than 4,000% last year on expectations that a prominent investor would take part in the rights issue.
Major local conglomerate Salim Group will also participate in the rights issue through an affiliate and will hold 6%, as will Tanjung’s conglomerate CT Corp, which will hold a further 1.88% after the transaction.
Tanjung completed the acquisition of Allo Bank, previously known as Bank Harda, in February last year with the aim of turning it into a digital bank.
Before the rights issue, Mega Corpora, a subholding company for financial businesses under CT Corp, held 90% of the shares. After the rights issue, Mega’s holding will be reduced to 60.87%.
Bukalapak had decided at its general shareholders meeting in December to allocate some of the funds it raised in its August initial public offering to mergers and acquisitions.
A spokesperson for Bukalapak said the company will share details on its Allo Bank plans at a later date.
The investment into Allo Bank by Bukalapak, Grab and Carro is the latest example of the growing interest among the region’s tech companies in Indonesia’s digital banking sector, which is fast shaping up as their next battleground.
GoTo, Indonesia’s largest private tech company, owns 21.4% of digital lender Bank Jago, while Singapore tech conglomerate Sea owns SeaBank in Indonesia, changing its name from Bank Kesejahteraan Ekonomi after acquiring the lender.
Indonesian fintech startup Akulaku is also a shareholder in Bank Neo Commerce, while Finaccel, a Singapore-based fintech company, holds shares in Bank Bisnis Internasional.
“Allo Bank could possibly be able to secure data from multi-ecosystems, both online and offline, with millions of users” after the tech companies and major conglomerates’ investment, said analysts at Citi in a memo on Monday.
“The right online and offline ecosystem is now with the bank, and with the right strategy/leadership, execution and technology, Allo Bank could become a serious challenger on the Indonesia digital bank landscape,” they added.
Indonesia’s Financial Services Authority eased rules on foreign ownership of banks last year, which is likely to spur more regional tech players to enter the banking business.
Smaller lenders in Indonesia need to raise funds to comply with minimum capital requirements, while tech companies see an opportunity to take stakes in an industry they see as the next growth sector.
Research by Google, Temasek and Bain & Co in 2019 showed that 47 million people in Indonesia were “underbanked” and 92 million were “unbanked”, by far the largest number of such people in Southeast Asia.
The underbanked refers to people with bank accounts but insufficient access to services like credit, while the unbanked are those without bank accounts.