Jakarta, June 22, 2023 – Under an agreement announced today, the International Finance Corporation (IFC), will invest up to $500 million in PT Bank BTPN Tbk (BTPN), comprising a social bond and a green bond issuance. The issuance of these bonds will be a first for BTPN, underscoring the bank's support for Indonesia's micro, small and medium enterprise (MSME) sector, in particular women-led businesses, as well as action on climate change.
Thematic bonds are uncommon in Indonesia. The investment from IFC, a member of the World Bank Group, is expected to help grow the nascent market for thematic bonds in the country, especially among private sector issuers, and contribute to boosting the depth and breadth of Indonesia's capital markets.
"IFC's proposed investment in Bank BTPN's social and green bond issuance proves our commitment to supporting the achievement of sustainable development goals through environmental and social loans. This will help us in realizing our vision to give significant change in the lives of millions," said Bank BTPN President Director Henoch Munandar. "As a member of SMBC Group, Bank BTPN will use the proceeds to support SMBC Group's transition plan in promoting sustainable finance and aligning its loans and investments with net zero emissions by 2050."
Indonesia is highly vulnerable to the impacts of climate change, but limited availability of financial products has posed challenges in climate financing. IFC's investment in a BTPN green bond supports Indonesia's goal for greener growth, aligning with the Government of Indonesia's Paris Agreement commitments. The bond will be used to finance green projects, including renewable energy, energy efficiency, green buildings, and clean transportation, among others. It will help bridge financing gaps for climate mitigation and adaptation and is expected to result in total projected greenhouse gas emissions reduction equivalent to 137,326 tons of CO2 per year.
"We are proud to be partnering with BTPN on this pioneering initiative, which will help catalyze further development of Indonesia's capital markets and bring tangible benefits to Indonesians across the country," said IFC Managing Director Makhtar Diop. "This investment will not only drive green growth, but it will also increase access to vital financing for small businesses -- in particular, those owned by women."
The financing gap for MSMEs, estimated at $166 billion or about 19 percent of Indonesia's GDP, was exacerbated by COVID-19. IFC's investment in the BTPN social bond will be used to finance MSMEs, which are vital to the Indonesian economy and are key job creators but are constrained by limited access to finance. With around half of the social bond proceeds earmarked for women owned MSMEs, the structure of the bond will ensure that female entrepreneurs, who are an important segment of MSMEs but face even wider financing gaps, receive greater access to finance.
A minimum of $400 million will be invested equally in the social bond and green bond with the balance of $100 million to be allocated to either the social bond or to the green bond. IFC will also support BTPN through knowledge sharing, innovation, and capacity building in relation to climate risk management (including environmental and social risk management), green building finance, supply chain finance and gender finance.
About BTPN
PT Bank BTPN Tbk (Bank BTPN) is a foreign exchange bank and is a merger between PT Bank Tabungan Pensiunan Nasional Tbk (BTPN) and PT Bank Sumitomo Mitsui Indonesia (SMBCI) in February 2019. Bank BTPN serves various segments in the banking industry, from retail to corporate customers, including retirees, micro-, small- and medium-sized enterprises (MSME) and productive, pre-prosperous communities; the consuming class segment; and the corporate segment. Bank BTPN provides the services through business units, such as BTPN Sinaya—a business unit for wealth management, BTPN Purna Bakti—a business serving retirees, BTPN Micro Business—a business unit serving micro businesses, BTPN SME—a business serving small- and medium-sized enterprises, Jenius—a digital banking platform serving the consuming class segment, and the corporate business unit, which serves national, multinational, and Japanese companies. Bank BTPN also has a subsidiary, namely PT Bank BTPN Syariah Tbk, which focuses on serving customers from the mass market. Bank BTPN also regularly provides training sessions and information for customers through the Daya Program—a sustainable and measurable empowerment program—to improve customers' capacity so they can grow and have a chance to live better.
About IFC
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2022, IFC committed a record $32.8 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises. For more information, visit www.ifc.org.
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