Indonesian state-owned Bank Rakyat Indonesia (BRI) is set to finalise the process of adding a new subsidiary in the business of venture capital and security. The bank targets the acquisition process to be finalised by this year.
“We hope that the due diligence period may wrap up soon and the acquisition process can be finalised by this year. Considering the fact that BRI is yet to own a subsidiary that is working in the security and venture capital sector,” BRI Managing Director Suprajarto told Indotelko.
In a separate occasion, BRI Operational Director Indra Utoyo told DailySocial that in order to realise its ambition, the company is preparing IDR500 billion (US$37 million) of funding, which will be allocated to acquire a venture capital firm, among the few. But BRI is still keeping the firm’s name a secret.
“We have not decided on a venture capital firm,” Utoyo said.
As it is commonly known, BRI operates five subsidiaries: BRI Syariah, BRI Agro, BRI Remittance, BRI Life, and BRI Finance.
The company’s attempt to acquire a venture capital firm is seen as a tactical move from the corporate sector to anticipate the massive growth of fintech industry, which is more convenient compared to starting from zero. This is also the way corporations are opening up opportunities for fintech startups and banks to collaborate in the future.
Previously, BRI Deputy Managing Director Sunarso stated that the company fully understands the urgency to expand into the fintech sector, which includes performing digital transformation to adjust with the needs of modern customers.
BRI’s plan differs greatly with the other state-owned bank BNI which is still considering to own a subsidiary in the form of a venture capital firm; whether through an acquisition or by building its own company.
Based on regulations set by financial services authority OJK, the minimum funding required to set up a venture capital firm is IDR50 billion (US$3.7 billion) for limited liability companies, and IDR25 billion (US$1.8 billion) for cooperations or CV.
Increasing popularity of VC business
Once BRI and BNI managed to realise their ambition, the banks are set to complement the list of banks with more than IDR30 trillion (US$164 million) core capital which had ventured into venture capital business. Competition among banks in securing fintech startups is also predicted to get more exciting.
By far there are only five banks in Indonesia in the more-than-IDR30 trillion category: Bank Mandiri, BCA, BNI, BRI, and CIMB Niaga.
Bank Mandiri is considered as pioneer among banks which had owned a venture capital arm with the launch of Mandiri Capital Indonesia (MCI); the firm has been actively expanding its startup portfolio.
In the first half of 2017, MCI had disbursed IDR300 billion (US$22 million) for seven fintech startups. Three of them had already been announced, such as Moka, Amartha, and PrivyID.
BCA has also set up Capital Central Ventura (CCV) after investing IDR200 billion (US$14 million). By far, there is nothing that we can say yet about the venture capital arm which was launched in early January.
CCV is expected to become BCA’s primary weapon in collaborating with fintech startups. In its official site, CCV stated that it is focussing on pre-Series A and Series A funding. Apart from targetting fintech, the firm is also targetting SaaS, hardware, and big data startups.
The article BRI Segera Akuisisi Perusahaan Modal Ventura, Siapkan Dana Rp500 Miliar was written by Marsya Nabila and first appeared in DailySocial. English translation and editing by e27.
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