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StanChart considers bid for Indonesia Islamic lender – sources

StanChart continuing with due diligence - source; Qatart Islamic Bank, Bank Mega among second-round bidders - sources, reuters

June 20, 2011 2:39 by

Standard Chartered Plc is planning to bid for a controlling stake in Indonesia’s PT Bank Muamalat alone as StanChart’s affiliate has dropped out of the race, sources with direct knowledge of the matter told Reuters on Monday.

Qatar Islamic Bank and Bank Mega TBK were among suitors that submitted second-round bids ahead of last week’s deadline, sources added.

Standard Chartered’s decision to pursue a nearly $300 million deal by itself underscores its desire to capture a bigger share of the Islamic banking business in the world’s most populous Muslim nation. Indonesia, Southeast Asia’s biggest economy, is a huge and untapped market for Islamic banking, which local and international investors are trying to capture.

Bank Danamon , controlled by Singapore state investor Temasek , and TPG-backed Bank Tabungan Pensiunan Nasional also plan to expand their sharia business.

However, some bankers were surprised by Standard Chartered’s decision to make a move on its own since the emerging market focused lender already has a presence in sharia banking through its affiliate PT Bank Permata.

It was unclear if Standard Chartered will merge Muamalat with Permata’s existing sharia banking, if it wins the auction.

Top shareholders of PT Bank Muamalat, Indonesia’s second-biggest sharia lender, were planning to sell an at least 51 percent stake in the unlisted bank for about $300 million, sources previously told Reuters. Morgan Stanley is running the auction.

Standard Chartered was continuing with due diligence and was likely to submit a bid soon, one of the sources said. PT Bank Permata, 45 percent owned by Standard Chartered, and Bank Mandiri had decided not to proceed with bidding, sources with direct knowledge told Reuters.

Standard Chartered and Indonesia’s Para Group, which owns Bank Mega, declined to comment. A QIB executive declined to comment. Morgan Stanley was not available for comment.
Muamalat, which has about 21.4 trillion rupiah ($2.5 billion) in total assets, could be valued between $750 million and $1 billion, one source previously told Reuters. A deal is likely to settle at three to four times its book value of $250 million, the source added.

Muamalat’s top three shareholders trying to sell the stake are — Islamic Development Bank, Boubyan Bank Kuwait , and Saudi Arabia’s Atwill Holdings Ltd. These shareholders collectively control 75.7 percent of the lender, according to its website.

QIB was seen as the front-runner to win the auction, but Standard Chartered’s entry into the race could change that. Some Middle Eastern banks have expanded into Indonesia to grow their Islamic banking. Last year, Qatar National Bank bought an 82 percent stake in small local lender Bank Kesawan for $82 million. (By Denny Thomas and Janeman Latul; Additional reporting by Regan Doherty, Dinesh Nair and Kelvin Soh; Reporting by Denny Thomas and Janeman Latul; Editing by Jacqueline Wong)

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