23 May 2016
SET-listed Group Lease Public Company Limited (GL), the pioneer of Digital Finance in ASEAN, has formed a solid alliance with the Japanese financial group J Trust to expand the efficient and cost-effective digital financial services to the huge Indonesian markets and elsewhere in the region.
The alliance was cemented after GL’s Board of Directors last week decided to issue US$130 million worth of convertible debentures in a private placement for J Trust Asia (JTA), a subsidiary of J Trust in Japan. This is the second batch after the first batch of US$30 million in May last year which was fully converted by JTA into GL shares at the end of last year.
J Trust is a Japanese financial group listed on the Tokyo stock exchange. Among other things, it owns the J Trust Bank, an Indonesian bank which has a local network of 62 branches.
“Our alliance with J Trust is a strategic partnership that is mutually beneficial,” stated GL Chairman and Chief Executive Officer Mitsuji Konoshita. “J Trust Bank can raise the funds locally with their deposits license while GL can manage the funds by lending to our local Indonesian clients in very efficient ways by using our unique ‘digital finance’ methods,” he added. “It’s a perfect collaboration between Bank and Finance.”
Explaining that the Indonesian business model is a “channelling” fees-based model, Mr. Konoshita said GL will not do motorcycle leasing but will diversify into agricultural machineries, solar panels and electrical appliances which are already implemented in Cambodia and being expanded to Laos. In addition, Mr. Konoshita expected to expand financing to cover areas that relate to the improvement of local Indonesians’ quality of life such as house renovation, farms improvement and inventory financing.
GL expects the Indonesian operations to turn profitable in a short period. The local joint venture company – GLFI, in which GL holds 65%, JTA holds 20% with the remaining 15% held by local Indonesian partners – is now awaiting a license from the Indonesian authorities and operation is expected to commence in this quarter.
Meanwhile, J Trust Chief Executive Officer Mr. Nobuyoshi Fujisawa also expressed confidence that the GL-J Trust alliance is a win-win partnership for both sides as they join forces to expand to the Indonesian and other regional markets.
Aside from the convertible debentures, the GL Board also decided to issue 170 million warrants (GL-W4) for shareholders at the ratio of 9:1. The warrants carry a two-year period while the debentures have a five-year maturity but both carry the same conversion price of 40 baht each. An Extraordinary Shareholders Meeting (EGM) has been scheduled for June 24 to give the final approval before both issues become effective.
GL will effectively raise more than 10 billion baht in new funds if the holders of the warrants and convertible debentures exercise all their conversion rights. The new funds will be used to support a major expansion in Cambodia, Laos. Indonesia and other new regional markets over the next 2-3 years.