Jakarta. Bank Rakyat Indonesia Agroniaga, or BRI Agro, a listed bank of state-controlled lender Bank Rakyat Indonesia, plans to raise Rp 558.8 billion ($41.9 million) from a rights issue.
“This [planned] corporate action is expected to strengthen the company’s capital,” BRI director of operational and finance Agro Sudarmin Sjamsoe said in Jakarta last week, as quoted by Antaranews.com.
He added that BRI’s current core capital is about Rp 900 billion and an injection from the rights issue will enable the lender to be classified in Book II, which include banks with a core-capital of between Rp 1 trillion and Rp 5 trillion.
BRI Agro remains in the Book I classification. Indonesian banks with higher classifications have added privileges, including permits to open more branch offices and different lending limits.
Sudarmin said BRI Agro plans to sell about 5.5 billion shares priced at Rp 100 per share. No offering price has yet been unveiled.
He added that BRI Agro expects BRI, its main shareholder, to absorb the offered shares. BRI currently owns a 80.42 percent stake in the lender, while pension funds of agriculture companies control 14.03 percent and the public 5.55 percent.
If BRI decides not to absorb the shares, the rights issue will result in the lender’s dilution in control of BRI Agro to 42.86 percent.
Sudarmin declined to provide a specific timeline for the rights issue.
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