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Para group.

Backgrounds

The Para Group was established by Chairul Tanjung, an indigenous businessman. Tanjung graduated from the school of dentistry of the University of Indonesia. He started business with his friends with a flagship of the Para Group building a factory producing children's shoes for export. The business started with a capital of Rp150 million in loans from Bank Exim, which later merged with other state banks to form a new bank Bank Mandiri, the country's largest lender.

Chairul Tanjung is categorized as a fast rising businessman. The business of the Para Group is flourishing. The company has recorded a leapfrogging growth when the country's economy was in a devastated condition. The first big stride was when Tanjung acquired Mega Bank in 1996. The Para Group then renamed it Bank Mega. Under the new management, the small ailing bank formerly owned by the defunct state bank Bapindo grew to become a healthy bank, now ranks among the country's major banks.

Later the Para Group expanded its business wing to the property sector building shopping center Bandung Super Mall (BSM). Currently Bank Mega has become the main financial pillar to support the business of the Para Group. Two other pillars are Trans TV and Bandung Super Mall.

The Para Group has three holding companies First, Sub holding Mega Global Finance (MGF) groups companies operating in financial services including Bank Mega, Bank Syariah Mega Indonesia, Mega Insurance, Mega Life, Para Financing, and Mega Capital Indonesia; second, Trans Corpora. Grouping companies operating in mass media, lifestyle and entertainment industries including Trans TV, Trans-7, Trans Coffee, Trans Lifestyle, PT. Bara Bali, PT. Mahagaya and property companies including Bandung Supermal, PT. Batam Indah Investindo, and PT. Mega Indah Investindo. Now in the process of establishment is Trans Studio Makassar; and third, CT Global Resources grouping companies operating in energy, mining & infrastructure sectors.

Previously the holding company of the group was PT Para Inti Holtindo, but later the holding company was renamed in 2008 Chairul Tanjung Corporation (CT Corp).

The Forbes Magazine of September 2006 placed Chairul Tanjung among 40 richest Indonesians. In this list he is the 18th with a total assets of US$ 310 million or more than Rp28.21 trillion (US$ = Rp9, 100).

Financial service

The financial service business of the Para Group is under Mega Global Finance which groups 8 companies operating in banking, multifinance, insurance and investment business.

In 1996, the Para Group through its subsidiary. PT. Para Global Investindo and PT. Para Rekan Investama took over PT. Mega Bank. Previously the bank was named PT. Bank Karman established in 1969 in Surabaya, but in 1992 it was renamed PT. Mega Bank and its head office was relocated to Jakarta.

In June 1997, the Para Group changed the logo of PT. Mega Bank hoping to improve its image and gain greater popularity. In 2000, the name of PT. Mega Bank was changed with PT. Bank Mega.

In 2000, PT. Bank Mega launched initial public offering to raise fund to strengthen its capital on the Jakarta and Surabaya Stock Exchanges. It was then renamed PT. Bank Mega. Currently its shareholders include PT. Mega Corpora (formerly PT. Para Global Investindo) controlling 55.67% of the shares and investing public holding 44.33%.

When the country was hit by crisis in 1997, Bank Mega continued to grow without support in recapitalization by the government. Most major banks in the wake of the crisis had to be recapitalized by the government.

By 2008, Bank Mega has a network of 200 units of offices including branch offices, and cash offices located in almost all major cities in Indonesia, and a Priority Banking.

Bank Mega plans to increase the number of the offices to 500 units in 2012. In the first six months of 2009, at least 50 new offices will be opened mainly in eastern part of the country including Makassar, Banjarmasin, Samarinda, etc. Around 200 of the 500 units in 2012, will be located in eastern Indonesia, up from only 30 units at present. Around Rp6 billion will be needed to open a new branch office or auxiliary branch office. Therefore, the additional 300 units will cost around Rp1.8 trillion.

The bank chose expansion to the eastern part of the country as that region still has a widely open market while the eastern region has been bristled with competition.

By November, 2008, the asset of the bank was Rp34.69 trillion, up from Rp32.81 trillion a year earlier. Its third party funds totaled Rp26.6 trillion, down from Rp27.38 trillion. The decline was attributable to a decline in giro deposits and savings from Rp6.55 trillion and Rp5.93 trillion respectively to Rp5.30 trillion and Rp5.34 trillion.

The Para Group has built an integrated estate at Jl. Tendean on South Jakarta known as One Stop Financial Services, where the Para Group have a number of subsidiaries operating in the financial services such as PT. Bank Syariah Mega Indonesia, PT. Mega Capital Indonesia, PT. Asuransi Jiwa Mega Life and PT. Asuransi Umum Mega (Mega Insurance).

Bank Mega Tbk and Bank Syariah Mega Indonesia (BSMI), are designed to have 1,000 branches each in Indonesia in 2018.

A synergy has also been developed by Bank Mega in cooperation with sister companies Mega Life and Mega Capital, to offer low cost and insured investment products. Through Mega Life, the Para Group developed cooperation with Sinar Mas, which is known to have strong financial business units such as Sinar Mas Mutliartha, Bank Shinta, etc.

Through Trans TV, Bank Mega is aggressive in advertising saving products with prize. Bank mega offers special discount using Bank Mega credit cards for shopping at Mahagaya and Coffee Bean.

Bank Syariah Mega Indonesia previously named PT Bank Umum Tugu, which was acquired by the Para Group in 2001 to be developed and converted into a sharia bank. On 25 August, 2004, PT. Bank Umum Tugu started operation as a sharia bank using a new name of PT. Bank Syariah Mega Indonesia. By the end of 2008, Bank Syariah Mega opened 230 branches. The number is expected to be increased by phases to 1,000 units in 2018.

PT. Mega Capital Indonesia, which was established in 1991 operates investment management. The fund managed by Mega Capital is substantially large reaching Rp4.2 trillion by June 2008.

PT. Para Multi Finance (PMF), PT. Mega Central Finance (MCF) and PT. Mega Oto Finance (MOF) operate in multifinance business offering to finance the purchases of motor vehicles.

PMF, which started operation earlier, finances the purchases of various brands of motorcycles. After the success with PMF, the Para Group established two other multifinance companies MCF and MOF--with separated management and infrastructure including branch offices. MCF handles the financing of the purchases of motorcycles of Honda and Suzuki, and MOF focuses more on financing the purchases of Yamaha motorcycles. MCF is a joint venture between the Para Group and a number of dealers; and PMF is wholly owned by the Para Group.

The two new multifinance companies use the logo of Bank Mega, which are their main financers.

The multifinance companies plan to open 50 branches mainly outside Java including Sumatra, Sulawesi, and Kalimantan.

Television Broadcasting Service

Televisi Transformasi Indonesia, better known as Trans TV started operation on 15 December 2001. Trans TV is the eight privately owned television broadcasting station licensed to operate with nation wide coverage in October, 1998.

The Para Group owns 99.99% of Trans TV through PT Para Inti Investindo (PII) with the rest owned by PT. Para Investindo. In 2006, PII was renamed PT Trans Corpora, or Trans Corp.

Trans TV grew fast to become a leading and popular TV station. In the second year of its operation it already hit the break even point by May, 2003. According to a survey by the Nielsen Media Research, currently Trans TV ranks the fifth largest among 10 TV stations earning television advertisements. It earned Rp149.2 billion in TV advertisement in 2008.

In June, 2006, Trans TV through its holding company Trans Corpora started expansion by acquiring a stake in TV 7 from PT. Duta Visual Nusantara of the Kompas Gramedia Group.

Trans Corp, acquired the majority share of PT Duta Visual Nusantara Tivi Tujuh (TV7). Trans Corp. acquired 55% stake in TV 7, with the Kompas-Gramedia group retaining 45%. The TV 7 station started operation with coverage of the Greater Jakarta, but in November 2002, it began expansion in coverage by building six relay stations to cover more than 65 cities. TV7 has 18 transmission stations and by the end of this year it will increase to 24 stations. In term of channels, TV 7 is the 7th largest among 10 TV stations in Indonesia. After the take over by Trans Corp, the name of TV 7 was changed with Trans 7. The alliance of two TV stations constitutes a business expansion strategy of the Para Group to face the conglomeration of television stations under Nusantara Citra Group, which groups TPI, RCTI, and Global TV.

Property

PT. Para Bandung Propertindo has built a shopping mall named Bandung Super Mall (BSM). BSM is the largest shopping center in Bandung built over a 8.2 hectare plot of land with an investment of Rp250 billion. Construction of the shopping mall was completed in 2001. BSM now has 250 tenants. There is still wide space not yet used in the land plot. A hotel, restaurant and other buildings are to be built on the remaining space.

Through PT. Para Inti Propertindo, the Para Group has taken over Hotel Crowne Plaza from PT Prabu Budi Mulia. The acquisition was part of the plan of Para Inti Propertindo, the subholding of Para Inti Holdindo, to expand business in the property sector.

Fashion and Restaurant Business

The Para Group has also acquired PT Mahagaya Perdana, a distributor of fashion products such as bags, shirts, shoes, perfumes, etc. carrying famous brands of Mango, Prada, Escada, Gucci, Hugo Boss, Alfred Dunhill, and Ettiene Aigner.

Through PT. Trans Lifestyle, the Para Group expanded to restaurant business by acquiring kafe such as Coffee Bean from PT Tifa Satu Tiga Dwima, later renamed Trans Coffee. It also acquired ice cream kafe of Baskin-Robbins. PT. Tans Lifestyle is 99.99% owned by Trans Corpora and 0.1% by PT Para Rekan Investama.

Tour and travel

Trans Lifestyle has reached conditional share sale and purchase agreement (CSPA) with the majority shareholder PT. Anta Express Tour & Travel Tbk. to acquire 245 million shares or 42.98% of Anta at a price of Rp225 per share. Included in the agreement was the purchase of 220.5 million shares of PT Griyainsani Cakrasadaya or 38.36% stake. Trans Lifestyle has secured support from PT Mega Capital to provide the necessary fund for the acquisition. Previously Anta Tour was 38.68% owned by PT Griyainsani Cakrasadaya and 48.87% by PT Kresna Graha Sekurindo Tbk.

Currently, 80% of the income of Anta Express came from ticket sales and the rest from travel service, sales of hotel vouchers and other services. By mid 2008, Anta Express reported an income of Rp795 billion, up from Rp694,59 billion year-on-year with net profit rising to Rp5.65 billion from Rp3.76 billion.

By the end of 2008, PT Anta Express Tour & Travel Service Tbk, increased its stake in travel service company PT Vayatour to 99.99% from 98.16% earlier.

Agribusiness

The Para Group has also expanded business to rubber and palm oil sectors in West Kalimantan. The company group is set to open 500,000 hectares of plantations in that region with an investment of Rp15 trillion including for rubber and palm oil processing plants.

The Para Group also is eyeing business in sugar, rice, and livestock farming business and mining in Kalimantan.

Electricity Infrastructure

The Para Group cooperates with Pertamina to build electric generating projects valued at US$ 1.5 billion. The power projects to be built include a 1,060 megawatt geothermal power plant project in Kamojang, West Java, and Ulubelu in Lampung and Lumut Balai in South Sumatra.

The Para Group and Pertamina will establish a joint venture to run the project. Pertamina has the geothermal power reserve and the Para Group will provide the fund. The Para Group has set aside Rp3 trillion in equity fund for the project. The rest will be raised from the public or financers.

Other Businesses

The Para Group has an ambition to expand business to become a major business player in Asia. In line with the ambition, the name of the holding company of Para Group has been changed with Chairul Tanjung Corporation (CT Corp.).

The Para Group also has planned to expand operation to aviation industry. It will establish an airline to be named Trans-Air with a market segment of executive class. The tariff, therefore, will be more expensive--twice higher that the tariff used by the national flag carrier Garuda Indonesia. It promises to give a Concorde class service.

Trans Corpora cooperates with PT. Hadji Kalla of the Kalla Group since 2007 to build an integrated tourism and entertainment center called Trans Studio Resort Makassar in the South Sulawesi capital city of Makassar with facilities the like of those of Disneyland. The project, to cost around Rp1 trillion, will occupy a 12.7 hectare plot of land. The project is to be completed this year its facilities include a shopping center called TRANS Walk and TRANS Rodeo Drive, TRANS Studio, TRANS Hotel, and an office of Bank Mega.

TRANS Walk and TRANS Rodeo Drive will occupy a land plot of 110,000 [m.sup.2]. The place is designed with the concept of exclusive and complete shopping center. It will be the first such shopping center with outdoor nuance in Makassar. It will offer for lease.

TRANS Studio, which will be housed in a 22,000 sq.m. Building, 20 meter high, will be the largest indoor entertainment park in Southeast Asia.

Twenty three types of games from quality programs of TRANS TV and TRANS 7 will entertain visitors. The first area will be Central Studio. In this part visitors will feel an experience and trick of being behind the scene, beyond the screen and see directly the results. The second area will be Lost City. In this part of the place visitors will follow the history of the maya Tribe which was full of intrigues and mysteries.

The third area is called Magic Corner. The sensation of a line world could be felt in this part and visitors will feel as if they are traversing a ghost house, cemetery and other magic places. The fourth area will be Studio for Kids, which is a special world for children, full of entertaining games.

TRANS Hotel is a five star resort hotel overlooking the sea. It will occupy a 1,200 sq.m. land plot. This hotel will have various facilities such as exclusive rooms, conventional halls, spa and private beaches..

The office building of Bank Mega will have 12 floors to be the tallest building in that location. It will be built over a 9,500 sq.m. plot of land near the entry gate to the TRANS Studio Resort Makassar.

The Para Group through PT. Batam Indah Investindo, which cooperates with Arsikon has established a joint venture to operate in the property sector and has secured a concession of 300 hectares of land in strategic location in Batam. An entertainment center and settlement center named Coastarina will be built in that place..

The Para Group also plans to set up a radio station and online or satellite media. Other targets are business in print media. The Para Group also plans to sell 20%-30% of the shares of Trans TV through initial public offering (IPO) after it has been fully fledged and making profit. The IPO fund will be used to finance business expansion and repay debts.

In Singapore, the Para Group cooperates with Anthoni Salim of the Salim family to establish an investment company named Grandiflora Pte. Ltd. This company has acquired a public company named Asia Medic Ltd, which operates in health treatment.

Grandiflora is a majority shareholder with a 27.76% stake in Asia Medic. Other shareholders include HSBC (Singapore) Nominees Pte Ltd having an 8.67% stake. Grandiflora Pte Ltd is owned by Silverbeads Internasional (50%) which represents the Salim Group and Billiontex Internasional Ltd (50%) representing the Para Group.

Financial performance

The Para Group has no much problem in raising fund it needs for business expansion. A number of world financial institutions have offered loans for the Para Group such as Citigroup and JP Morgan. The Para Group also has its own financial institutions like Bank Mega, Bank Syariah Mega and Mega Capital Indonesia. Bank Mega is the largest financer for the Para Group accounting for 40% of the loan fund used by the group.

In 2008, the assets of Bank Mega were valued at Rp 34.5.trillion in September 2008. It reported net profit amounting to Rp 397.billion in 2008.

Members of the Para Group

1. Asuransi Umum Mega, PT (Insurance)

2. Asuransi Jiwa Mega Life (Insurance)

3. Bank Mega Tbk, PT (Bank)

4. Bank Syariah Mega Indonesia, PT (Bank)

5. Mega Capital Indonesia, PT (Investment Company)

6. Para Multi Finance, PT (Multifinance)

7. Mega Oto Finance, PT (Multifinance)

8. Mega Global Finance, PT (Investment Holding)

9. Para Bandung Propetindo, Pt (Property)

10. Para Bali Propertindo, PT (Property)

11. Para Indo Propertindo, PT (Property)

12. CT Corporation (Investment Holding)

13. Televisi Transformasi Indonesia PT & Duta Visual Nusantara Tivi Tujuh, PT (Television Broadcasting)

14. Para Inti Investindo, PT (Investment Holding)

1. Trans Lifestyle, PT (Restaurant)

2. Mahagaya Perdana, PT (Fashion Trading)

3. Others
Table--1
Summary of balance and profit and loss report of PT. Bank Mega

(Rp billion)

Description 2008 * 2007

Current assets 33,167 33,744

Fixed assets 1,296 735

Other assets 91 428

Total assets 34,554 34,907

Current liabilities 6,547 6,842

Non current 25,078 24,981
liabilities

Other liabilities 311 145

Total liabilities 31,936 31,968

Equity 2,618 2.939

Total liabilities and 34,554 34,907
equity

Operating income 1,475 1,636

Net profit 397 521

Source: Bank Mega

* until September
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Title Annotation:COMPANY PROFILE
Publication:Indonesian Commercial Newsletter
Article Type:Company overview
Date:Feb 1, 2009
Words:3043
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