Superapp provider Grab and Singapore Telecommunications have invested in an Indonesian bank, weeks after the city-state-based superapp provider poured funds into another lender in the island nation.
The deal is the latest in a slew of transactions Grab has made in Indonesia’s financial sector as it chases its ambitions to serve the archipelago’s vast unbanked and underbanked population.
Documents displaying shareholder information show that Grab in early January took a 16.25% stake in Bank Fama International, a small, private lender, through an entity called A5-DB Holdings. A5-DB Holdings is a “direct wholly-owned Subsidiary of GFG (“Grab“),” as per the Singapore-based company’s filing to the Securities and Exchange Commission in the U.S., where it is listed.
“Grab can confirm that we’ve made an investment into Bank Fama and acquired a minority stake in the bank,” a Grab representative said.
Singapore Telecommunications, or Singtel, also invested in the bank, it said in a statement on Friday.
The telecom group “acquired 2.4 billion new shares issued by [Bank Fama] for a cash consideration of 500 billion rupiah” it said, or $34.8 million.
Its stake is the same as Grab’s, meaning the Singaporean companies own 32.5% of Bank Fama, which is majority-owned by local media conglomerate Elang Mahkota Teknologi, better known as Emtek.
Two Emtek affiliates purchased a majority of the lender’s shares in December. Emtek and Grab signed a strategic partnership in July.
Emtek also confirmed Grab and Singtel’s investment via a stock exchange filing on Friday.
According to Singtel’s statement, Bank Fama had an unaudited net asset value of 1.04 trillion rupiah as of June.
Singtel Group CEO Yuen Kuan Moon told Nikkei Asia that it is “fully aligned with and shares [Bank] Fama’s digital banking proposition to serve Indonesia’s unbanked and underbanked population and drive greater financial inclusion.”
The investment is the latest in a recent string that Grab has undertaken in Indonesia’s financial sector.
It took majority control of local digital payments provider Ovo in October, upping its stake by acquiring shares from co-owners Tokopedia, the country’s e-commerce giant, and local conglomerate Lippo.
In November, Grab invested in Bareksa, a local wealth tech company. Earlier this month it invested in Allo Bank.
Grab CEO Anthony Tan had told Nikkei Asia when it went public in December that it would invest in “digital banking and all our financial services,” adding that he believes Grab is “building the financial core infrastructure of the future.”
Bank Fama will look to leverage Grab’s vast trove of data on individual users as well as micro, small and medium enterprises to expand its services and lending.
The lender may also be able to leverage similar data at Indonesian e-commerce platform Bukalapak as Emtek is a major shareholder.
Grab is among a host of tech companies investing in Indonesian banks.
Its Indonesian rival GoTo holds around a fifth of the shares in local digital lender Bank Jago, while Singapore tech giant Sea owns SeaBank in the archipelago. Bukalapak was an investor in Allo Bank, alongside Grab.
Tech companies are enticed by the untapped potential of Indonesia’s financial sector.
A report from Google, Temasek and Bain & Co. in 2019 showed that 92 million people, or over half of Indonesia’s adult population, were unbanked, while a further 47 million were underbanked, meaning they had a bank account but were not receiving credit, investment or other financial services.
For Singtel, its investment is yet another foray into banking after forming a digital banking joint venture with Grab in Singapore.
The partners in 2020 won one of the city-state’s first digital banking licenses.
Their bank was expected to begin operating in early 2022, but there has been no indication that it will do so.
The joint venture also applied for a digital banking license in Malaysia in July, Singtel said in its statement on Friday regarding its Indonesian investment.
Last year, Singtel said it would raise its investment in digital services companies in Southeast Asia, adding it was open to taking significant minority stakes in such companies.
Southeast Asia’s biggest telecom operator controls about half of Singapore’s mobile market, but its maturity means competition is stiff. And the coronavirus pandemic has weighed on demand for some services, such as overseas roaming, prompting the company to seek new growth drivers. – NIKKEI ASIA
