CIMB ‘categorically denies’ that it will privatise Indonesian unit Niaga

[SINGAPORE] CIMB has denied plans to privatise CIMB Niaga, Indonesia’s sixth-largest bank by assets, in response to multiple media reports stating that it was considering doing so.

“CIMB Group categorically denies plans to privatise CIMB Niaga,” it said in a statement on Thursday (Oct 22). “The group has made no decision and tabled no formal proposal in relation to the potential privatisation of CIMB Niaga.”

CIMB added that the Indonesian unit remains an “integral part” of its regional footprint, and that the group remains “committed” to its operations in Indonesia. The group owns about 91.4 per cent of CIMB Niaga, with the remainder publicly traded on the Indonesian Stock Exchange.

The statement followed reports that cited analysts who attended a briefing with CIMB group chief financial officer Khairul Rifaie. Privatisation, a secondary offering and a strategic share placement were three options discussed during the briefing.

“(An) investor’s debate was on capital given potential for Niaga privatisation though regulatory hurdle is high,” said Citi in a Wednesday note, where it estimated an implied valuation of RM945 million (US$231.6 million) for CIMB Niaga.

Any potential privatisation would face “high” regulatory hurdles, said the note.

CIMB on Thursday also said it will continue to meet all applicable regulatory guidelines, including minimum free float requirements in a “timely and structured manner”.

CIMB Niaga faces a minimum free float of 12.5 per cent by March 2027 and 15 per cent by March 2028 as part of new regulations which are part of a move to boost Indonesian stock liquidity and transparency. The Indonesian CIMB unit currently has a free float of about 6.6 per cent.

Any plans for CIMB to pare its stake in Niaga might face more hurdles after financial services firm MSCI on Oct 16 warned that Indonesia’s emerging-market status was under threat. That would effectively be a double downgrade for Indonesian equities to “standalone market” status, and has resulted in a mass sell-off of Indonesian stocks.

CIMB Securities, the group’s research arm, expressed a similar assessment to a Kiwoom Sekuritas Indonesia analyst, who described a public offering as less feasible under current market conditions, making privatisation the most strategic and credible option.

CIMB Niaga is scheduled to release its third-quarter results on Oct 28, followed by CIMB Group on Nov 25.