Goldman, Morgan in talks to buy brokerage
Jakarta, September 12, 2011
Goldman Sachs and Morgan Stanley are each in talks to buy an Indonesian brokerage firm to expand their reach into the hot capital market of Southeast Asia's biggest economy, sources with direct knowledge of the deals said on Monday.
Goldman is in talks to buy Tiga Pilar Sekuritas and expects to complete the deal before the end of 2011 as it aims to start a local brokerage operation next year, said two sources with direct knowledge of the deal.
Goldman has completed due diligence for Tiga Pilar and both parties are now negotiating the deal's structure as well as valuation, said one of the sources, who declined to be identified because the talks were not public.
The deal size is likely to be small as Goldman is only seeking to buy the operating licenses that the deal will provide. It will need to inject at least the 50 billion rupiah ($6 million) in licence costs and required brokerage capital.
Rival Morgan Stanley has also identified a brokerage firm to acquire and hopes to conduct due diligence this year in order to start operations next year, said three other sources with direct knowledge of this deal.
The talks are aimed at either buying a brokerage to get its seat on the stock exchange or to buy a seat from an existing brokerage, one of the sources said.
Officials at Morgan Stanley, Goldman and Tiga Pilar declined to comment.
Both banks plan to add research analysts plus as well as sales and trading staff to the brokerages next year, while Goldman could also add investment bankers, as they seek to win underwriting fees from equity offerings and debt deals, the sources said.
Morgan currently has an underwriting license in Indonesia but not a brokerage license, while Goldman does not have either, said a spokesman for Indonesia's capital markets regulator Bapepam-LK.
The banks' plans in Southeast Asia's top economy, which has seen its stock market hit record levels this year on surging foreign investment, follow moves by Nomura Holdings and Citigroup to ramp up their equity research teams in Jakarta this year. – Reuters