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Sunday, August 18th, 2019

The Bank of Tokyo-Mitsubishi UFJ, Ltd. : Announces Japan’s Largest Financial Group MUFG to Make a Strategic Investment in Indonesia’s Bank Danamon

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by December 26, 2017 General

MUFG seeks to take a 73.8% majority stake in Bank Danamon,reaffirming
Indonesia’s importance in its regional strategy

Mitsubishi UFJ Financial Group, Inc.’s commercial banking entity The
Bank of Tokyo-Mitsubishi UFJ, Ltd. (“MUFG”) announced today that it has
entered into conditional share purchase agreements with Asia Financial
(Indonesia) Pte. Ltd. (“AFI”) and other affiliated entities (the
“Sellers”), to acquire their shareholding interests in Indonesian bank
PT Bank Danamon Indonesia, Tbk. (“Danamon”), subject to applicable
regulatory approvals. AFI is a wholly-owned subsidiary of Fullerton
Financial Holdings Pte. Ltd. The Sellers currently hold in aggregate,
73.8% shareholding interests in Danamon.

This strategic investment by MUFG will be executed through three steps
(the “Proposed Transaction”), and completion of the Proposed Transaction
will result in MUFG becoming the largest shareholder in Danamon. It will
also bolster MUFG’s growth strategy in Asia & Oceania and contribute to
the overall development of the Indonesian banking sector.

Outline of Proposed Transaction[1]:

  • Step 1: MUFG will acquire an initial 19.9% stake in Danamon, based on
    a price[2] of IDR 8323 per share (US$0.61) and at an
    investment amount of IDR 15.875 trillion (US$ 1,171 million). The
    price was based on a 3Q17 P/B of 2.0x with certain adjustments
    applied. AFI will continue to be the majority shareholder in Danamon
    upon closing of Step 1, which is expected to be within a few days.
  • Step 2[2], [3]: MUFG intends to then seek regulatory and
    other relevant approvals to acquire an additional 20.1% to increase
    its stake in Danamon to 40% (“Step 2”). This step is expected to close
    between Q2 – Q3 of 2018, subject to receiving these approvals.
  • Step 3[2], [3]: Upon completion of Step 2, MUFG intends to
    seek the necessary approvals to increase their stake in Danamon beyond
    the 40%, and this will provide an opportunity for all other existing
    Danamon shareholders to either remain as shareholders or receive cash
    from MUFG[4]. With the closing of Step 3, MUFG’s final
    stake in Danamon is expected to be over 73.8%.

Strategic Rationale

MUFG’s investment in Danamon represents another crucial milestone for
its strategic plans in Asia & Oceania. The bank has greatly expanded its
presence, diversified its business mix in the region and strengthened
its commercial banking business through similar strategic partnerships
with prominent banks across the region[5]. In Indonesia, MUFG
has been operating for 50 years and currently has a full services branch
in Jakarta, one sub-branch in Surabaya, and nine service points across
the country.

Indonesia is the largest economy in ASEAN underpinned by excellent
growth fundamentals including favourable demographics, a rich resource
base and stable political climate. MUFG’s investment in Danamon is a
strong testament to the bank’s optimism in the country’s long-term
prospects and commitment to the ongoing development of the Indonesian
banking sector. MUFG expects that this investment into the country will
positively contribute to the growth of the Indonesian banking sector and
economy as a whole. MUFG will establish an integrated and comprehensive
services platform that serves as a gateway for clients wishing to make
inroads into Indonesia’s burgeoning economy as well as local companies
keen on expanding into the region. This investment will also
strategically allow MUFG to benefit from Danamon’s foothold in the
developing local retail and small and medium enterprises (SME) segments
to deepen its banking franchise in Indonesia.

Mr. Takayoshi Futae, MUFG’s CEO for Asia & Oceania region said: “As one
of the leading banks in Asia & Oceania, we have long recognised
Indonesia’s role as one of the key drivers of the region’s development
and have sought to establish a stronger presence in the country.”

Mr. Futae added: “Danamon is a well-respected institution in the local
banking sector, renowned for its experienced and capable management
team, sound business platform and profitable franchise, and would make a
very welcome and strategic addition to the MUFG group as we press on
with our regional strategy. We are supportive of the leadership of
Danamon’s management, and are confident that our future collaboration
will create synergies that would allow us to better serve customers and
shareholders and enhance our mutual growth.”

“As Japan and Indonesia celebrate 60 years of diplomatic relations in
2018, this partnership is also a fitting and timely reminder of the deep
ties that exist between both countries, and we will leverage this
alliance to further intermediate business flows between these two great
nations and contribute to ASEAN’s economy.”

For Danamon, currently the fifth most profitable Indonesian commercial
bank by earnings, the investment by MUFG will allow it to tap on MUFG’s
financial strength, relationships with Japan’s top corporates, global
network as well as product and sectorial expertise to enhance its growth
ambitions. As a supportive and long-term shareholder, MUFG will harness
Danamon’s established and respected brand franchise to foster greater
synergies and enhance Danamon’s position as a leading and prominent
Indonesian bank, one that remains committed to delivering high quality
services to its customers.

“We are confident that MUFG coming in as a shareholder of Danamon is
beneficial to the company’s stakeholders, including its employees,
clients and customers, as well as business partners. With deep banking
expertise and international experience, we believe MUFG is the right
partner for Danamon as they embark on their next phase of growth. Since
2003, we have been a shareholder in Danamon and will continue to be
supportive of them. We remain invested in the company and look forward
to working closely with MUFG during this period. Indonesia is a dynamic
market and we continue to be optimistic about its growth and long term
potential, as well as that of its financial services sector,” said Mr.
Tow Heng Tan, Director, Fullerton Financial Holdings.

Notes:

[1] The Proposed Transaction is subject to
regulatory and shareholders’ approvals and has closing conditions
customary for a transaction of this nature. Shareholders are advised to
exercise caution when trading their shares.

[2] The prices for Danamon’s shares in Steps 2 and
3 will be based on a similar approach as Step 1. There is no certainty
as to whether the price at each step will be higher, lower or the same
as the steps preceding it. The Step 2 and Step 3 prices will be
disclosed at the appropriate time.

[3] For the avoidance of doubt, in accordance with
Indonesian regulations, there will not be a mandatory tender offer in
Step 2 and Step 3.

[4] Further details will be shared in due course,
at an appropriate time.

[5] MUFG has invested in a 77% stake in Bank of
Ayudhya Public Company Limited (Krungsri) in Thailand, 20% in VietinBank
in Vietnam and 20% in Security Bank Corporation in the Philippines.

Cautionary Statement Regarding MUFG’s
Forward-Looking Statements

This communication contains forward-looking statements. We use words
such as expects, intends, and similar expressions to identify
forward-looking statements. Actual results could differ materially from
those projected or forecast in the forward-looking statements. MUFG
assumes no obligation to update the information in this communication,
except as otherwise required by law. Readers are cautioned not to place
undue reliance on these forward-looking statements that speak only as of
the date hereof.

About MUFG

Mitsubishi UFJ Financial Group, Inc. is one of the world’s leading
financial groups, with total assets of approximately US$2.7 trillion as
of 30 September 2017. Headquartered in Tokyo and with approximately 350
years of history, the Group has a global network with over 2,300 offices
across more than 50 countries. It has about 150,000 employees and close
to 300 entities, offering services including commercial banking, trust
banking, securities, credit cards, consumer finance, asset management,
and leasing.

The Group’s operating companies include Bank of Tokyo-Mitsubishi UFJ,
Mitsubishi UFJ Trust and Banking Corporation (Japan’s leading trust
bank), and Mitsubishi UFJ Securities Holdings Co., Ltd., one of Japan’s
largest securities firms.

The Bank of Tokyo-Mitsubishi UFJ, Ltd. is Japan’s premier bank, with a
global network spanning around 50 countries. Outside of Japan, the bank
offers an extensive scope of commercial and investment banking products
and services to businesses, governments and individuals worldwide.

Through close partnerships among our operating companies, Mitsubishi UFJ
Financial Group, Inc. aims to “be the world’s most trusted financial
group”, flexibly responding to all of the financial needs of our
customers, serving society, and fostering shared and sustainable growth
for a better world. The Group’s shares trade on the Tokyo, Nagoya and
New York (NYSE: MTU) stock exchanges.

About FFH

Fullerton Financial Holdings (FFH) is a strategic and operating investor
in financial and related services in Emerging Markets. FFH seeks to
create shareholder value by being committed to building differentiated
business models focused on the Mass Market and SME segments, and an
enabler of digital innovation for our portfolio companies. FFH is a
wholly owned portfolio company of Temasek Holdings (Private) Limited, an
investment company headquartered in Singapore. As at 31 December 2016,
FFH’s total assets stood at S$28.5 billion, and its portfolio includes
investments in 10 financial institutions located in nine countries. For
more information, please visit the website www.fullertonfinancial.com.

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