ID/Efendi & Agustiyanti
Private equity groups are keenly eyeing assets in Indonesia, with a phalanx of companies that use the investment strategy intending to pour in as much as $3 billion between them this year.
Commitments for 2012 announced by companies include $1 billion by Yawadwipa Cos, $820 million from Northstar Capital, $500 million by KKR & Company, $400 million by Saratoga and $200 million by Falcon House Partners.
Private equity companies have identified Indonesiaâ€™s growing economy as the factor that is attracting them to the country. Overseas, private equity companies have been most active when credit is easily available and companies perceived to be poorly managed are available to acquire.
Private equity firms generally borrow money to buy companies, increase the efficiency of their operations then sell them on or undertake initial public offerings.
Ancora Capital managing director Hendrik Susanto said his group aimed to increase its total funds to $10 billion within five years.
â€śWith slowing economic growth in a number of economies, Indonesia will become the prime target,â€ť Hendrik told the Wharton Global Alumni Forum in Jakarta last week.
Saratoga, which was co-founded by entrepreneur Sandiaga Uno, controls 51 percent of Mandala Airlines.
Yawadwipa, which was established early this year, has sought to buy a stake in Bank Mutiara, the lender formerly called Bank Century.
Falcon House was set up by several bankers including Glenn Yusuf, previously chairman of the Indonesian Banking Rescue Agency.
KKR, previously known as Kohlberg Kravis Roberts, is a US buyout firm. KKR has hired Ridha Wirakusumah, the president director of Bank Internasional Indonesia until 2010, as the director of the company. Ridha said that Indonesian companies needed funds to develop the countryâ€™s equity market.
The total market capitalization of 448 companies listed in Indonesia Stock Exchange is Rp 3,631 trillion ($385 billion) now, equivalent to about a half of Indonesia gross domestic product.