Singtel, Grab acquire stake in Indonesian bank

A Singtel promotional display at Paya Lebar Quarter. Photo taken November 2021A Singtel promotional display at Paya Lebar Quarter. Photo taken November 2021

Singapore Telecommunications (Singtel) has acquired a 16.26 percent stake in Indonesian bank PT Bank Fama International for 500 billion rupiah, or around S$48 million, the telco said in a filing to SGX Friday. 

Ride-hailing, food-delivery and fintech platform player Grab is also an investor in Fama, the filing said.

“Indonesia is home to Asean’s largest unbanked and underbanked population. With their strong track record in financial services and lifestyle services, the investors will bring significant capabilities and insights from an extensive customer base to develop Fama’s digital banking proposition and drive greater financial inclusion,” Singtel said in the filing. 

“This latest investment in digital banking is consistent with Singtel’s strategic reset of riding digital growth trends to build sustainable new businesses across Asia, particularly in markets where the group has a strong presence,” Singtel said. 

Singtel and Grab have already teamed up to win a digital banking license in Singapore, with operations expected to launch this year. The two are also collaborating on applying for a digital banking license in Malaysia. In addition, Singtel has an around 35 percent stake in Telkomsel, an Indonesian mobile telco provider.

In its prospectus filed in the U.S. earlier this month, Grab cited a largely unmet demand for financial services, and a “severe mismatch” in demand and supply for basic services such as payments, transfers, savings, credit and insurance.

In 2020, in Southeast Asia, more than 80 percent of transaction volume between businesses and consumers was in cash, largely due to a lack of cashless options or access to alternatives, Grab said in the prospectus, citing data from Euromonitor.   

“Digital banking is still in the very early stages of development and represents an attractive long-term opportunity as it enables us to be able to address all segments of financial services and products,” Grab said in the prospectus.

The Fama deal, which was via Singtel’s wholly owned subsidiary Singtel Alpha Investments, involved acquiring 2.4 billion new shares, the filing said. The deal was funded via internal sources, the filing said. 

Fama’s unaudited net asset value was 1.04 trillion rupiah, or around S$99.8 million, as of end-June 2021, the filing said. Fama is majority owned by a subsidiary of Indonesia-listed Elang Mahkota Teknologi, a media and technology conglomerate, the filing said.