WeLab, a Hong Kong-based fintech company, has expanded its operations to Indonesia with the completion of its acquisition of a 40-year-old Indonesian bank, PT Bank Jasa Jakarta (BJJ), in partnership with PT Astra International Tbk (Astra).
The Financial Services Authority (OJK) of Indonesia has approved the acquisition, WeLab said.
Jakarta-headquartered BJJ operates 11 commercial bank branches in the city with a clientele comprising mainly individuals and small and medium-sized enterprises.
A report by South China Morning Post said the total cost of acquisition was US$510 million (S$720 million).
Last year in December, when the deal was announced, WeLab said a consortium led by it, WeLab Sky, had raised US$240 million for the deal.
The WeLab Sky consortium comprises Allianz X, Boyu Capital, Horizons Ventures, SCBX Group and TFB (Taipei Fubon Bank) Capital as members.
WeLab Sky and Astra subsidiary, PT Sedaya Multi Investama (Astra Financial), will each own 49.56 percent of BJJ.
The transaction is Southeast Asia's largest digital bank merger and acquisition transaction for this year.
According to WeLab, the new owners aim to transform BJJ into an “innovative digital bank in Indonesia” while keeping its physical banking operations intact.
WeLab’s group CEO, Simon Loong, said the partnership with Astra “reinforces WeLab's strategic focus on enhancing cross-country and business synergies with partners to increase scale and reach, in order to further strengthen the breadth and depth of the existing pan-Asian fintech platform”.
The BJJ deal is WeLab's second strategic partnership with Astra since the formation of a fintech lending joint venture, PT Astra WeLab Digital Arta (AWDA), in 2018.
Most analysts reckon digital banking represents a huge opportunity in Indonesia to provide accessible digital banking solutions, especially to the retail and micro, small & medium enterprises (MSMEs).
Around 77 percent of Indonesia's population of 270 million is either underbanked or unbanked.