KDB seeks to acquire Indonesia’s Tifa Finance

The state-run Korea Development Bank (KDB) is seeking to acquire Indonesia’s PT Tifa Finance, sources said Thursday.

The bank has looked for opportunities to diversify its portfolio in the Southeast Asia region for months, targeting financial companies that have a license to offer a range of services from leasing and consumer financing to credit card financing.

This is also part of KDB’s efforts to look beyond Korea’s crowded financial market where commercial and policy banks are facing difficulties in generating positive cash flow amid low interest rates.

According to multiple sources and media reports, the KDB is conducting due diligence to acquire the country’s PT Tifa Finance.

Established in 1989, PT Tifa Finance is located in Jakarta and offers a wide range of financial services, including leasing and consumer financing. With total assets of about 140 billion won ($116.8 million), the firm posted a 2.4 billion won net profit last year.

It is expected to cost about 10 billion won to acquire the firm’s management rights.

However, a KDB official declined to confirm the takeover attempt.

“The KDB has done its utmost to boost its presence in Southeast Asia under the government’s New Southern Policy. Indonesia is a strategically very important country in the region,” said the official.

“The state-run bank has sought opportunities there for a long time. About 170 financial companies are currently under review, but nothing has been decided at this point.”

In June, the state-run policy bank announced it has chosen Deloitte Korea as its adviser to list potential targets there for acquisitions.

Deloitte Korea has already recommended multiple financial firms there as takeover candidates in June.

The KDB is considered to be a latecomer in the Southeast Asian financial market.

Apart from its office in Hong Kong, KDB operates offices in Bangkok, Ho Chi Minh City, Yangon and Manila.

It set up an office in Indonesia in February.