Indonesia's Lippo Karawaci Secures Funding US$1.01B
Lippo Group through PT Inti Anugerah Pratama sold around 9.44 percent its share ownership in property developer PT Lippo Karawaci Tbk - Photo by the Company

JAKARTA (TheInsiderStories) – Indonesia’s PT Lippo Karawaci Tbk (IDX: LPKR) announced has sold 17.6 percent of first real estate investment trust (REIT) for S$202 million (US$276.74 million), said the company on Tuesday (18/09) to its Singapore units.

It said, OUE Limited (OUE) has signed conditional sales and purchase agreement to take over 60 percent stake in Bowsprit Capital Ltd while other unit OUE Lippo Healthcare Ltd., (OUELH) will take over the remaining 40 percent stake. Bowsprit is the First REIT manager, that owns 7 percent of the first REIT for total S$99 million.

In addition, Bridgewater International Limited, LPKR’s indirect wholly owned subsidiary also signed Conditional Unit Purchase Agreement with OLH Healthcare Investments Pte. Ltd., OUELH’s indirect wholly owned subsidiary, who will acquire 10.6 percent of first REITs units held by Bridgewater for S$103 million.

The company added, the sale agreements are collectively referred to as the “Transaction Documents” The process for the Transaction Documents is expected to be completed by end of November 2018.

Unit of the Lippo group said, following this transaction documents, LPKR’s shareholding in FIRST REITs will be reduced from 28.2 percent to 10.6 percent. Lippo Karawaci will use the proceeds mainly for general corporate purposes.

Ketut Budi Wijaya, LPKR President Director stated, “The funds will ultimately strengthen LPKR balance sheet and further enhance its cash flow.”

In the first half of 2018, Bowsprit’s property portfolio was valued at about S$1.3 billion. OUE executive chairman Stephen Riady said that the proposed acquisition will bring OUE’s assets under management (AUM) to about S$8 billion by this year and put the group on track to achieve S$10 billion in AUM by 2019.

Furthermore, OUELH will launch a renounceable underwritten rights issue to raise about S$150 million to fund the acquisition, issuing about 2.2 billion new rights shares at S$0.0675 apiece on the basis of one rights share for every one existing ordinary share held by entitled shareholders as at the books closure date.

OUE and Itochu Corporation, which own 64.35 and 25.32 per cent stakes in OUELH respectively, have given irrevocable undertakings to fully subscribe for their entitlements under the rights issue.

OUE is a Singapore-based, diversified property owner, developer and operator with a real estate portfolio spanning across Asia and the United States. OUE is the sponsor of OUE Hospitality Trust and OUE Commercial REIT, established for the purpose of investing in income-producing hospitality and hospitality-related real estate, and commercial assets in financial and business hubs.

OUELH formerly known as International Healthway Corporation Limited is principally involved in development, operation and management of healthcare and related facilities in Japan and China, and seeks to expand its healthcare portfolio to pan-Asia

OUELH’s existing 2 investments in healthcare sub-sectors are well-aligned with the emerging industry trends, particularly, the increasing need for elderly care in Japan, which is driven by a rapidly aging population, as well as the increasing demand for quality medical services in China due to rising affluence and urbanization. The Group seeks to expand its portfolio across China, Japan and Southeast Asia.

While, its holding Lippo Karawaci is Indonesia’s property company anchored by a large land bank and solid recurring income base. LPKR’s businesses comprise residential and townships, retail malls, hospitals, hotels and asset management.

LPKR is listed on the Indonesian Stock Exchange with market capitalization of Rp8.35 trillion as at Sept. 14, 2018. The developer builds residential, light industrial, commercial, retail properties throughout Indonesia. LPKR through its subsidiaries manage and operate hospitals, malls and hotels in major cities in Indonesia and also provides a broad range of infrastructure services to the residents of our developments, and other property management and REIT management services.

Through its two main publicly listed subsidiaries, PT Lippo Cikarang, Tbk (IDX: LPCK”) and PT Gowa Makassar Tourism Development Tbk (IDX: GMTD), of which LPKR owns 54.4 percent and 62.7 percent respectively, LPKR develops and currently operates urban developments at Lippo Cikarang in Bekasi and at Tanjung Bunga in Makassar.

In addition, LPKR owns 50.98 percent of PT Siloam International Hospitals Tbk (IDX: SILO), the private hospitals network in Indonesia, which currently manages and operates 34 state-of-the-art-hospitals in 25 cities throughout the country, comprising 12 hospitals in Greater Jakarta and 22 hospitals distributed across Java, Sumatra, Kalimantan, Sulawesi, Bali and Nusa Tenggara

Lippo Karawaci has established and sponsored two public listed REIT in Singapore, namely First REIT and Lippo Malls Indonesia Retail Trust.

First REIT was listed on the Singapore Exchange Securities Trading Limited on Dec. 11, 2006. Managed by Bowsprit Capital Corporation Limited, First REIT’s portfolio consists of 20 properties located in Indonesia, Singapore and South Korea.

US$1: SG$1.37