이 기사는 2019년 12월 11일 08:00 thebell 에 표출된 기사입니다.

Korea Development Bank (KDB) is set to sign a deal to acquire Indonesian multi-finance company TIFA Finance, which would allow the state-funded bank to diversify its geographical revenue base.

KDB is currently in the final stage of due diligence to buy a controlling stake in TIFA Finance, sources familiar with the matter said on December 5. The two parties have come to an agreement on most of the issues and are expected to sign the deal sooner or later.

Acquiring TIFA Finance is part of the bank’s efforts to diversify the revenue base. KDB Chairman Lee Dong-gull stressed to reporters at a press conference last Wednesday that it is a misunderstanding that KDB carries out its role of policy financing only with funds from government budget, pledging to strengthen the bank’s revenue base during his remaining term until September of next year. He also expressed his commitment to expansion into overseas markets, briefly mentioning Vietnam and Indonesia.

KDB’s position as a policy financial institution has been gradually weakened for the last decade, with growth in development financing beginning to slow down domestically in 2000s. In addition, the domestic financial sector overall has faced challenges in recent years due to prolonged low interest rates and sluggish economic growth. Consequently, the state-run bank has turned its eyes to Southeast Asian countries to develop new revenue sources.

In particular, global financial institutions’ attention, including KDB, is focused on Indonesia, where demand for development financing is expected to increase sharply due to the government’s plan to move its capital to Borneo in 2023.

Initially KDB considered entering the country’s banking industry, but changed its plan to target multi-financing firms, because there was no reason for the policy bank to risk buying debt-laden local banks in the increasingly crowded retail banking market in Indonesia.

TIFA Finance is a multi-financing company, with business areas including installment financing, factoring and lease financing. Founded in 1989, TIFA Finance was listed on the Indonesian stock market in 2011. Last year it recorded revenue and net income of 18.6 billion won ($15.6 million) and 2.4 billion won ($2 million), respectively, according to its financial statement. Given the number of issued shares and the price of its shares, the firm’s market capitalization is estimated to be 18.3 billion won ($15.3 million), which industry insiders are expecting to be similar to KDB’s offer.

More than 200 multi-financing companies are operating in Indonesia. Among South Korean financial firms, Shinhan Card, Hana Capital and Lotte Capital have entered the sector.

(By reporter Jin Hyun-woo)