JAKARTA (TheInsiderStories) – Singapore’ Keppel Corp., through its subsidiary, Alpha Investment Partners Ltd., and local warehouse provider, PT Mega Manunggal Property Tbk (IDX: MMLP), formed a private equity fund company. Both parties will invests Rp2.38 trillion (US$170 million) for the new entity.
Based on the company announcement on Thursday (11/14), Mega Manunggal and Alpha Investment signed a cooperation agreement on Nov. 11, 2019. At the special purpose vehicle (SPV), the company will control 25 percent of shares and 75 percent owned by Alpha Investment along with other investors.
In the transaction scheme, the operator will transfer all of land assets, buildings, facilities and rental contracts to a SPV, named PT Indo Log One. The assets that will be transferred are PT Unilever Indonesia Tbk (IDX: UNVR)’ Mega Distribution Center, Li Fung Warehouse and Selayar warehouse which located in West Cikarang, Bekasi. There also Intirub Business Park I and II, located in Cililitan, East Jakarta.
The provider will use the fresh funds from the asset transfer to support its business expansion in the future. While, the private funds is also expected to generate fee-based income and to sustain company’ business growth and asset monetization.
The transaction is not required to obtain shareholder approval, but classified as an affiliate transaction, which requires an independent team assessment report. Nevertheless, Mega Manunggal still plans to hold a shareholder meeting on Dec. 20, 2019.
Alpha Investment is an asset management firm based in Singapore. The company was established in 2003 with asset under management reached US$8.9 billion. To date, the company won 120 global transactions with value of close to $24 billion.
While, Mega Manunggal plans to add three warehouses in this year, which will be built in th 30 hectare landbank. The company was offering the warehouse to the tenants.
The publicly listed firm did not disclose the investment to build the warehouses. Regarding to the location, the company still prioritize in Java Island.
Southeast Lang Jones LaSalle (JLL) reported on July 15, Indonesia’ industrial and logistics sector grow rapidly in Southeast Asia, driven by strong domestic trends including the e-commerce sector penetration, growth in intra-regional trade and increased logistics efficiency.
The study emphasizes that Indonesia’ rapidly expanding e-commerce market and rapid urbanization growth will be main drivers for logistics sector growth. Indonesia’s rapidly growing e-commerce market will be the largest in Southeast Asia in 2025, with a value of more than US$45 billion.
“E-commerce sales are expected to reach five to eight percent of total retail sales by 2025, this figure is up from the current one to three percent, based on research by Google and Temasek Holdings,” said James Taylor, Head of Research JLL Indonesia.
JLL reportedly, by 2020 to 2025, urban population in Southeast Asia is expected to grow by two percent per year, with the fastest growth rate in Vietnam 3.5 percent and Indonesia 3.1 percent. In addition, the current middle income population in Southeast Asia is expected to grow six percent per year over the next five years and Indonesia is expected to contribute around three quarters of that increase.
Furthermore, Indonesia’ logistics performance has increased very rapidly in the last 3 years and is now ranked 46th globally compared to 2016 ranked 63rd, according to the World Bank’s Logistics Performance Index.
Even so, several Indonesian e-commerce companies began to develop their businesses in modern facilities. For example, Lazada, which is one of the largest e-commerce in Indonesia, expanded their build-to-suit facilities to 77,000 square meters from 30,000 square meters.
Taylor rated the warehouse is now becoming increasingly sophisticated thanks to requests from users and investors who continue to look opportunities for development, operational collaboration or acquisition opportunities to enter the market.
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