KUALA LUMPUR, Jan 16 (Reuters) - PT Bank Panin Syariah Tbk , a unit of Indonesia's seventh-largest bank, has raised 475 billion rupiah ($39.3 million) with an initial public offer of shares, becoming the first full-fledged Islamic lender listed on the country's stock exchange.
Funds from the IPO will go towards expanding loans for small to medium-sized firms and tripling the bank's branch network, which now consists of 10 branches, Ahmad Fathoni, the bank's corporate secretary, told Reuters.
"I think the market is still open - much of it is still untapped," he said. Of Indonesia's Muslim-majority population of 247 million, industry players estimate only a fifth have access to a formal financial institution.
Indonesia's central bank expects sharia-compliant banking assets to expand between 19 and 29 percent this year, a slowdown from growth of 32 percent in 2013 because of a weak rupiah and pressure on the economy from external deficits.
Indonesia has the world's biggest Muslim population but its Islamic finance market lags neighbouring Malaysia: Indonesian Islamic lenders hold about 4.8 percent of total banking assets compared with over 20 percent for their Malaysian counterparts.
There were 11 full-fledged Islamic banks in Indonesia with combined assets of 229.5 trillion rupiah as of October, compared with 120 conventional lenders with assets of 4,716.8 trillion rupiah, latest data from the central bank showed.
Panin Syariah is a unit of PT Bank Pan Indonesia, which owns 51 percent of the bank after the IPO. It is the first of 30 IPOs expected by the Indonesia Stock Exchange this year. Its shares were flat at 97 rupiah on Thursday, their second day of trade, down from the IPO price of 100 rupiah.
PT Bank Muamalat Indonesia, Indonesia's second-largest sharia-compliant lender, indefinitely delayed a $177 million IPO last June because of weak market conditions. (Editing by Andrew Torchia)