Saratoga likes Indonesia resources, infrastructure, consumer sectors; IPOs afoot | Insider sector data
(Insider Stories) — Saratoga Capital likes the resources, infrastructure and consumer sectors in Indonesia and says it is holding toll road and consumer finance plays, while the Indonesian Stock Exchange is still good value despite big gains, according to a founding partner.
Meanwhile strong growth in demand for services among Indonesia’s rapidly expanding middle class should benefit the fund as it readies to launch two separate IPOs of financial-services units later in the year.
“Infrastructure is huge. We are talking about not enough ports, not enough roads, not enough airports, not enough clean water,” Saratoga founding partner Kay Mock told The Insider Stories at the AVJC Indonesia 2013 private equity and venture capital forum at Intercontinental Jakarta Midplaza.
Saratoga is one of the most established private equity players in Indonesia and while Mock says it’s “still evaluating” infrastructure investments, the fund has added to its more accustomed Indonesian resources plays by grabbing holdings in a Trans Java Toll Road developer and an automotive finance company.
“What we are focusing on are natural resources in Indonesia, [and] infrastructure and consumer-related [investments],” according to Mock, who was formerly with Government of Singapore Investment Corp. and says Saratoga now has $600 million in funds after a 2011 fundraising exercise, of which it has invested $135 million.
“We just recently committed to a toll-road transaction, so we are going to get involved in toll roads.”
Alongside majority owner PLUS Expressways Bhd. from Malaysia, Saratoga has a minority holding in PT Lintas Marga Sedaya, which is developing a toll road section linking Cikampek in Bogor, Greater Jakarta, and Palimanan in East Java province.
Infrastructure projects in Indonesia are notoriously difficult to get done but next year’s election could yield some more progress in making such investments more attractive. “The land reform in 2011 helped, but still things are moving a little bit slowly. Hopefully things can move a bit faster after the election,” Mock says.
For Saratoga’s IPO plans, the outlook seems to be clearer. Breakneck growth in auto demand mean should create interest in a June IPO of between 10% and 20% of its 50%-owned PT Mitra Pinasthika Mustika, which provides automotive financing and holds sole distributorship for Honda motorbikes in East Java and East Nusa Tenggara provinces via its unit MPM Finance. Morgan Stanley and Indo Premier Securities are set to be among the underwriters for the deal.
Likely to launch its IPO on a similar mid-year schedule, Saratoga private-equity unit Saratoga Investama Sedaya is set to become Indonesia’s first publicy traded company offering private equity services, and should be able benefit from rapid development in the country’s financial services markets.
And there’s still value in Indonesian shares after recent record-breaking gains, Mock says. “Fund managers just need to be disciplined and not get caught up in the heat of the moment and commit to transactions with high valuations.”
Saratoga Investama was founded by banker Sandiaga Uno and Edwin Soeryadjaya, a son of PT Astra International Tbk founder William Soeryadjaya. Uno owns a 32.45% holding in SIS, while Soeryadjaya holds 32.45% directly and also controls 33.88% of SIS shareholder PT Unitras Pertama, which has 35.06%. Soeradjaya’s younger sister Joyce Soeryadjaya Kerr is also an indirect shareholder via a 52% stake in Unitras, as is PT Saratoga Inti Perkasa via a 14.12% Unitras holding.
