Adira to offer sukuk in Malaysia

JAKARTA. Major financing firm PT Adira Dinamika Multi Finance, the automotive financing arm of private lender Bank Danamon, plans to source funds to finance its business by offering sukuk, or Islamic bonds, in Malaysia in the second half.

The sukuk will be Adira’s first attempt at selling debt papers overseas, according to Adira president director Willy Suwandi Dharma.

“We are exploring the possibility of offering the ringgit-denominated sukuk in Malaysia. Hopefully we can realize the plan in the second half,” he said recently.

Adira is currently holding talks with Malaysia-based underwriters to determine the value of debt papers to be offered and their coupons.

Funds generated from the sukuk will be used to meet Adira’s remaining financing needs for the second half. The company, Willy said, was still in need of around Rp 500 billion (US$42.38 million).

“The debt papers’ value will be less than Rp 500 billion because sukuk is only one way to meet the needs. We will use other channels as well, including by issuing bonds domestically,” he added.

Adira is still allowed to issue between Rp 2 trillion and Rp 2.5 trillion worth of bonds as part of its continuous bonds offering. It already issued Rp 1.5 trillion worth of bonds in May and is looking to carry out another bonds issuance in the third quarter.

The firm is also expecting to seal a deal with lender Commonwealth Indonesia to jointly finance automotive purchases.

Adira previously relied heavily on Danamon as its parent company for funding and joint financing. However, that led to Danamon suffering from a high loan-to-deposit ratio (LDR).

Following Adira’s venture into other funding channels, Danamon has been able to reduce its LDR and portion within the joint financing segment.

According to statistics, 78 percent of Adira’s loans were jointly financed by itself and Danamon in 2010 but, three years later, the joint loan figure had come down to 39 percent.

Meanwhile, Willy said that the company now aimed at boosting its sharia financing portfolio to around Rp 1 trillion by the end of 2014. Its latest data, which ended in May, shows that the sharia financing amounted to Rp 657 billion, equal to 5 percent of Adira’s total financing.

As much as 98 percent of the sharia loans was channeled to the motorcycle segment and the rest to the car segment.

“We have seen an uptick in the financing booking, approaching Idul Fitri. Each segment has recorded a 5 to 10 percent increase from the previous month,” Willy said.

For its 2014 business, Adira set the target of its outstanding financing at Rp 36 trillion to Rp 38 trillion, up 6.8 percent to 12.8 percent from a year ago. By May, its new financing had grown 10 percent year-on-year to Rp 13.8 trillion.

Adira’s shares are publicly traded on the Indonesia Stock Exchange (IDX) under the “ADMF” code. They closed at Rp 11,400 apiece on Tuesday, climbing 0.4 percent from a day before. (Tassia Sipahutar)