Mitsubishi UFJ to Buy Indonesia Car Loan Firm Mandala for $467 million

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Mitsubishi UFJ Financial Group announced on Monday that it would acquire Indonesian auto lending provider Mandala Multifinance for 7 trillion rupiah ($467 million) in order to expand its Asian presence and capitalize on developing market consumer growth.

Japanese and other Asian corporations are increasingly aiming to establish and grow their presence in Southeast Asia in the expectation of attracting an emerging middle class in a region with a population of 690 million people.

The Mandala acquisition would aid MUFG’s expansion of its auto loan business in Indonesia, which it has created through Adira Dinamika Multi Finance, a car loan unit of MUFG’s Indonesian banking unit, Bank Danamon.

MUFG’s major Japanese banking business, MUFG Bank, will retain 70.6% of the acquisition, which is expected to close in early 2024. Adira will control 10%.

MUFG sees Indonesia as particularly important because it has the highest GDP in Southeast Asia, with high growth predicted in the future, according to a statement from the banking firm.

Mandala, which has a large presence in eastern Indonesia, offers car loans for new motorcycles as well as multi-purpose loans backed by motorcycles in the local market.

The deal follows MUFG’s $200 million investment in Indonesian fintech company Silvrr Technology, known as Akulaku, and 596 million euro acquisition of the Philippine and Indonesian units of Dutch consumer finance company Home Credit.

Indonesia’s finance market has drawn strong M&A interest in recent years.

In 2022, Singapore’s United Overseas Bank paid approximately S$5 billion ($3.70 billion) for Citigroup’s consumer division in four Southeast Asian nations, while Nasdaq-listed ridehailing-to-payments conglomerate Grab Holdings paid $35 million for a 16.3% share in Indonesia’ Bank Fama International.

Oversea-Chinese Banking Corp, Singapore’s second-largest bank, is seeking for acquisitions in Indonesia to accelerate its growth, its CEO told Reuters last year.

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