Mitsubishi UFJ Financial Group said on Monday it was buying Indonesian auto loan provider Mandala Multifinance for 7 trillion rupiah (¥67 billion) to deepen its Asian presence and tap consumption growth in emerging markets.
Japanese and other Asian companies have been increasingly looking to build and expand their footprint in Southeast Asia in the hope of capturing an emerging middle class in a region with a population of some 690 million.
The Mandala acquisition will help MUFG expand its auto loan business in Indonesia, which the Japanese bank has built through Adira Dinamika Multi Finance, a car loan unit of MUFG's Indonesian banking unit, Bank Danamon.
In the deal, to be completed by early 2024, MUFG's main Japanese banking unit, MUFG Bank, will take 70.6% while Adira will hold 10%.
MUFG considers Indonesia to be particularly important because it boasts the largest gross domestic product in Southeast Asia, with high growth expected in the future, the banking group said in a statement.
Mandala provides auto loans for new motorbikes and multi-purpose loans secured by motorbikes in the domestic market, with a strong presence in eastern Indonesia.
The deal follows MUFG's $200 million (¥26.8 billion) investment in Indonesian fintech company Silvrr Technology, known as Akulaku, and €596 million (¥93.2 billion) 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.
Singapore's United Overseas Bank acquired Citigroup's consumer business in four Southeast Asian markets for about S$5 billion (¥530.4 billion) in 2022, while Nasdaq-listed ridehailing-to-payments group Grab Holdings bought a 16.3% stake in Indonesia' Bank Fama International for $35 million last year.
Singapore's second-biggest bank, Oversea-Chinese Banking, is looking for acquisitions in Indonesia to speed up its growth, its CEO told Reuters last year.