Source: Reuters
Morgan Stanley is all set to trump Goldman Sachs in a deal to buy a brokerage seat in Indonesia from PT Tiga Pilar Sekuritas, sources said, as the race to tap the growing financial market in Southeast Asia’s biggest economy intensifies.
Goldman was initially in talks with Tiga Pilar last year and had completed due diligence, a deal structure and valuation for the Jakarta-based securities firm.
But a lack of progress with Goldman prompted Tiga Pilar’s owners to initiate discussions with Morgan Stanley, the sources who had direct knowledge of the matter told Reuters.
“The deal is almost done and the regulator is looking at it now,” said a source, adding the process could be completed before the end of the first quarter.
The sources declined to comment on the financial value of the deal and did not want to be identified because the talks are private. Tiga Pilar, Morgan Stanley and Goldman declined to comment.
Morgan’s move to expand in Indonesia, recently lifted to a sovereign investment grade status, follows Nomura Holdings and Citigroup who last year ramped up equity teams in Jakarta to challenge leaders Credit Suisse and Deutsche Bank.
The deal still requires regulatory approval. A full broking license would allow Morgan Stanley to cover the secondary side of sales and trading as well as research in a country that saw a record high stock market last year and is expected to see new fund inflows in the wake of the ratings upgrade.
Indonesia sets almost no ownership limits for foreign investors who want to own a stock brokerage but a brokerage firm must be a member of the country’s stock exchange to trade Indonesian stocks among its members.
The stock exchange currently has 120 members and will not issue anyone new memberships, so if any foreign banks want to join they must buy an existing members’ seat, said Eddy Sugito, a listing director at the Indonesia stock exchange.
Tiga Pilar agreed to open talks with Morgan Stanley because Goldman appeared to show insufficient enthusiasm after completing its due-diligence, a source said.
The deal value is likely to be in the low millions as Morgan Stanley is only seeking to buy the brokerage license but it will need to inject at least Rp50 billion (US$6 million) in license costs and required brokerage capital.
Tiga Pilar, which is controlled by the Tan Pia Sioe family, traded Rp178 billion by stock value in the first nine months of 2011, ranking it 114 out of 117 active brokerages, according to stock exchange data.
