Indonesia’s newly established sovereign wealth fund Danantara is planning to create a national asset management company by merging the asset management divisions of several major state-owned banks, reported Bloomberg, citing sources.
Danantara plans to
recruit advisers to support this initiative, which involves asset management units of PT Bank Rakyat Indonesia (BRI), PT Bank Mandiri, and PT Bank Negara Indonesia (BNI).
It
aims to create a larger asset manager capable of competing both domestically and regionally, with plans to include additional banks’ asset management units.
Earlier this year, the asset management arms of BRI, Mandiri, and BNI managed nearly of up to $8bn in assets, based on the banks’ financial statements.
Danantara plans to complete the transaction by the first quarter of next year, although discussions are still underway and no final decisions have been reached.
Challenges associated with this initiative include persuading minority shareholders of the banks to divest their stake at a reasonable price and negotiating distribution agreements.
Established this year, Danantara manages Indonesia’s state enterprises, investing their dividends, and attracting external investment for projects deemed strategically important for the nation.
Danantara’s investments senior director Sunata Tjiterosampurno mentioned earlier this month that the fund plans to use part of its cash from state company dividends and an initial bond issuance for upcoming projects.
Additionally, Danantara has expressed intentions to invest in the local stock market and has earmarked funds for bond markets.
The current initiative aligns with its objective of revitalising growth in Indonesia’s economy to levels comparable to those observed in the 1990s.
Danantara was reported as its assets are valued at approximately $1tn, which would position it among the largest sovereign wealth funds globally.
