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Publish Date : 13-Jan-2015

Taiwan-based Cathay Life Insurance has decided to purchase a stake in PT Bank Mayapada Internasional of Indonesia as part of the insurance company's attempts to increase its existence in the Association of Southeast Asian Nation (ASEAN) economic bloc. It is the 2nd purchase by Cathay Life in ASEAN in less than a month after its purchase of a 20 % stake in Rizal Commercial Banking Corp. (RCBC) of the Philippines. Cathay Life under its newest purchase agreement will pay approximately NT$8.7 billion (US$272 million) to get a 40 % stake in the Indonesian bank, which is possessed mainly by the Mayapada Group, as per to Cathay Financial Holding Co., the parent company of the life insurer.

Cathay Financial said that the purchase price represents a price-to-book value ratio of 3.15, which is in line with other mergers and acquisitions in Indonesia. The purchase deal will be finished in two stages, beginning with Cathay Life's purchase of a 24.9 percent stake in Bank Mayapada, which is likely to be finished in the first quarter of the year. According to the statement in the second stage, pending approval from Indonesia's Financial Services Authority, Cathay Life will acquire the other 15.1 percent stake in the bank. A overseas buyer in Indonesia does not need regulatory authorization to purchase a stake of less than 25 % in an indigenous bank. Cathay Financial said that when the deal is completed, Cathay Life will become the second largest shareholder in the bank after Mayapada Group, which operates financial, retail, property, medical in Indonesia.

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