RHB Capital Expands into Indonesia

KUALA LUMPUR, Malaysia -- Malaysia's fourth-largest lender by assets, RHB Capital Bhd., is expanding its regional footprint with plans to buy 80% of Indonesia's PT Bank Mestika Dharma for 1.16 billion ringgit ($344.2 million).
RHB Capital will join Malaysian peers such as CIMB Group Holdings Bhd. and Malayan Banking Bhd. in penetrating the Indonesian market.
CIMB has a controlling stake Bank CIMB Niaga while Maybank has majority stake in Bank Internasional Indonesia.
RHB plans to extend Bank Mestika's presence throughout Indonesia. RHB Capital Managing Director Tajuddin Atan said Bank Mestika has 50 branches and "with a strong capital adequacy ratio of 27% currently, it should be able to fund its expansion through internally generated funds."
Mr. Tajuddin said Bank Mestika is exploring an initial public offering and expects to be listed on the Indonesian stock exchange by the second quarter of next year.
He expects Bank Mestika to contribute positively to the company's earnings.
"The group's contribution from overseas operations will be raised to 8% from 4% based on the first-year contribution from Bank Mestika," RHB Capital Chief Financial Officer Kellee Kam Chee Khiong said.
The planned purchase from PT Mestika Benua Mas, the major shareholder in Bank Mestika, pegs the transaction at 3.5 times price to book and 23 times price to earnings, RHB Capital Director Azlan Zainol said.

Bank Mestika had total assets of 1.91 billion ringgit as of June 30, 2009 and an average return on equity of 27% from 1999 and 2008.
RHB Capital said it will fund the proposed acquisition through a renounceable rights issue of 361.1 million shares at 3.60 ringgit a share, which will raise 1.3 billion ringgit.
The deal is pending approval from the central banks of Malaysia and Indonesia.