SINGAPORE: Mandiri Sekuritas, a brokerage arm of state-owned Bank Mandiri, has opened its first regional branch in Singapore to expand the firm’s portfolio to serve as underwriter for foreign companies, becoming Indonesia’s first securities firm with a full capital market license in a neighboring country. The firm obtained a capital market services license from the Monetary Authority of Singapore in August this year to provide underwriting services, targeting institutional investors.
“The license will be fully operational by the end of November this year and we will start transacting in early January,” Mandiri Sekuritas managing director, Laksono W. Widodo, said on Friday (30/09).
Laksono said that dozens of foreign clients have already signed up for brokerage services, but declined to name them.
Mandiri Sekuritas is close to its target of raising Rp 10.4 trillion ($801 million) through equities and bond issuances this year. The brokerage had 25 underwriting mandates booking Rp 9.9 trillion in bond issuances from January to August, a 57 percent increase from the same period last year. Its equity underwriting value reached Rp 4.1 trillion after completing five underwriting mandates from January to August, a 233 percent increase from the same period last year, Laksono said.
“From our analysis, the equity market is starting to grow as of mid-2016, due to the tax amnesty program,” Laksono said.
Local brokerage firms will likely generate greater revenue due to excess liquidity in December when repatriation of funds is expected to be at its peak. The first stage of the tax amnesty program ended last week, where participants declared assets worth a total of Rp 3,620 trillion rupiah, with Rp 137 trillion repatriated to Indonesia.
The first stage of the amnesty program imposed the lowest penalty at 2 percent of declared wealth. The second stage will end on Dec. 31 imposing a 3 percent penalty, while participants can expect to pay a 5 percent penalty in its third stage, in January to March next year.
Mandiri Sekuritas booked Rp 307 billion in revenue in the first eight months of this year, up 18 percent from the same period last year from proprietary trading, by trading in-house funds or funds owned by the firm. This contributed to 60 percent of its revenue, while 26 percent was derived from its investment banking unit and the remainder from capital market transactions.
It also recorded Rp 500 billion worth of transactions per day where 55 percent of transactions were from institutional clients, while the remainder were from retail clients. So far this year, Mandiri Sekuritas has underwritten for PP Properti, the property developer unit of state-controlled construction firm PP; Wijaya Karya Beton, a subsidiary of state-controlled builder Wijaya Karya; and state toll road operator Jasa Marga; and steel maker, Krakatau Steel.
So far this year, Mandiri Sekuritas has underwritten for PP Properti, the property developer unit of state-controlled construction firm PP; Wijaya Karya Beton, a subsidiary of state-controlled builder Wijaya Karya; and state toll road operator Jasa Marga; and steel maker, Krakatau Steel.