<article><p style="text-align: justify;">If 2015 was considered the comeback year for Private Equity in Indonesia, then 2016 can well be called the period when PE activity in Southeast Asia&#8217;s largest economy accelerated, and also saw the creation of the country&#8217;s first unicorn.</p></article>

<p style="text-align: justify;">If 2015 was considered the comeback year for Private Equity in Indonesia, then 2016 can well be called the period when PE activity in Southeast Asia&#8217;s largest economy accelerated, and also saw the creation of the country&#8217;s first unicorn.</p>
<p style="text-align: justify;">The numbers best capture the story. Indonesia witnessed a sharp increase in PE/VC activity in 2016, posting approximately $1.47 billion in value from 33 deals, three times that of  2015, when the country raised only about $432 million in value from 26 deals. In fact, the 2015 recovery had followed the slump in in the previous year (2014), when PE/VC activity totalled to just $230-million fund-raise spread across a mere six transactions, according to data from Duff &amp; Phelps.</p>
<p style="text-align: justify;">Indonesia&#8217;s biggest success story best illustrates the recovery, and also indicates that the country, which for years, had been under the shadow of other high-flying Asian economies, has finally found its moment in the sun, as it becomes an emerging frontier for corporate growth. This deal involved a $550 million funding round in ride hailing app Go-Jek by top global PE firms <span style="color: #000080;"><strong><a style="color: #000080;" href="http://www.dealstreetasia.com/?s=KKR" target="_blank">KKR</a></strong></span> and <span style="color: #000080;"><strong><a style="color: #000080;" href="http://www.dealstreetasia.com/?s=Warbug+Pincus" target="_blank">Warbug Pincus</a></strong></span>.</p>
<p style="text-align: justify;">Put simply, this investment round was the largest-ever in Indonesia’s booming tech startup scene, and made Go-Jek the first unicorn in the country with valuation of over $1.3 billion.</p>
<p style="text-align: justify;">&#8220;The Go-Jek deal highlights the significant market opportunity that Indonesia presents, particularly from a technology perspective. Few countries in the world have the ability of growing a company with so much value when only focusing on the domestic market,&#8221; said Joongshik Wang, Partner, Transaction Advisory Services Ernst &amp; Young Solutions LLP in a recent report.</p>
<p style="text-align: justify;">Yet, the Go-Jek is only part of the story. Malaysia&#8217;s GrabTaxi, now headquartered in Singapore, had also raised US$750m in September, led by SoftBank Group, that also saw investments from undisclosed existing and new shareholders. Looking at the big picture, both the Gran and Go-Jek investments rounds had a common theme &#8211; Indonesia.</p>
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<p>&#8220;While Go-Jek is entirely focused on Indonesia at present, Grab has stated that its key goal is to further penetrate the Indonesian market. This could see the two companies go head- to-head in a more aggressive manner going forward. The market in Indonesia for ride- hailing applications is estimated at US$15b by Grab, providing significant opportunity. Further, this market looks to increase as diversification into food delivery and logistics continues,&#8221; Ernst &amp; Young noted in its quarterly PE briefing report for Southeast Asia that published earlier this week.</p>
<p>Incidentally, the Go-Jek deal alone surpassed the total PE deal flow in Indonesia in 2015.</p>
<p>The calendar year of 2015 had seen PE investments come unstruck as the country’s economic growth fell to the slowest pace in five years due to a combination of factors such as the collapse of the commodities markets, restrictive and unclear regulations, and local businesses continuing to quote valuations that their enterprises had commanded at the height of the commodities boom. Besides, in 2015, the deals space was led by large number of small e-commerce players getting funding, and Indonesia had failed to see even a single deal as that of the previous year (2014) when e-commerce marketplace, PT Tokopedia, received $100 million in funding from Japan’s SoftBank Corp and Sequoia Capital, which was then the largest ever investment received by an Indonesian startup.</p>
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<p style="text-align: justify;">Indonesia’s strong GDP growth coupled with a young and upwardly mobile population have made it an emerging favourite for private equity firms. From energy and commodity sectors earlier, the recent past has seen PE firms target industries that cater to the country’s consumer sector and a fast-growing middle class that drives consumption.</p>
<p style="text-align: justify;">Southeast Asia’s internet economy is predicted to steadily grow to $200 billion by 2025 with Indonesia as one of the main players. The region is now already the world’s fastest-growing internet region, with a user base of 260 million expected to grow to about 480 million by 2020, according to a Google representative. Some of the key drivers are booming youth population, lack of “big box retailers” and rapidly growing middle class.</p>
<p style="text-align: justify;">During the past 12 months, technology was the top contributing sector in Indonesia accounting for an estimated 48 per cent of deal values. This is followed by consumer discretionary (22 per cent), energy (13 per cent), and others (17 per cent).</p>
<p style="text-align: justify;">&#8220;For Indonesia, some of the large deals &#8211; especially in the resources sector &#8211; are driven by regulations where foreign owners have sold their local assets to Indonesian companies. In addition, Indonesian Government introduced several reforms this year opening up a range of sectors for foreign investments and increasing foreign ownership cap on a few other sectors. They are also talking about several other reform initiatives including reducing tax rates.<br />
Energy, oil &amp; gas and resources contribute significantly to Malaysia and Indonesia’s economies. In 2017, there could be more transactions in these sectors driven by restructuring. On the other hand, the reforms in Indonesia are expected to encourage more foreign investors to invest in the country. We expect to see a reasonable amount of traction in 201,&#8221; said Srividya Gopalakrishnan, Managing Director, Duff &amp; Phelps Singapore Pte. Ltd</p>
<p style="text-align: justify;">Despite the phenomenal acceleration in PE investments in 2016, this year&#8217;s numbers still trail the bumper year of 2013, when the country had recorded 16 deals, worth over $1.7 billion.</p>
<h3 style="text-align: center;">Top PE/VC deals in Indonesia</h3>
<h3 style="text-align: center;"></h3>
<h4 style="text-align: justify;"><em><strong>KKR, Warbug Pincus &#8211; Go-Jek</strong></em></h4>
<p style="text-align: justify;">Indonesia’s on-demand motorbike taxi service Go-Jek raised $550 million in a funding found led by private equity firms KKR &amp; Co. and Warburg Pincus LLC, as it battles competition from other ride-hailing apps such as Grab and Uber in a 250 million people market. The other named investors in this round include Farallon Capital and Capital Group Private Markets.</p>
<p style="text-align: justify;">Go-Jek said the new funding round will enable it to enhance the scale and quality of its platform and application services. The company also indicated that it planned to expand operations outside Indonesia, to Southeast Asia region, and this is set to trigger a three-way battle with Uber and Grab, across the region.</p>
<h4 style="text-align: justify;"><em><strong>GIC &#8211; NSR</strong></em></h4>
<p style="text-align: justify;">PT Nusantara Sejahtera Raya (NSR), which operates the Cinema 21, Cinema XXI and The Premiere brands in Indonesia, entered into a strategic partnership with GIC, Singapore’s sovereign wealth fund, to further anchor the leadership position of NSR and to set up the company for the next stage of growth. GIC’s investment amount is IDR 3.5 trillion ($259.59 million), with the partnership expected to expand NSR’s cinema footprint nationally.</p>
<h4 style="text-align: justify;"><em><strong>Northcliff &#8211; Ratu Prabu Energi</strong></em></h4>
<p style="text-align: justify;">Northcliff Capital, a Singapore-based investment company, agreed to invest $200 million in property and oil &amp; gas projects managed by PT Ratu Prabu Energi Tbk (ARTI), a locally-listed energy firm. Ratu Prabu booked Rp 225 billion in revenue last year, almost half of which comes from the property vertical, which helped the energy company book Rp 19 billion in net income.</p>
<h4 style="text-align: justify;"><em><strong>CVC Capital Partners &#8211; Siloam International Hospitals</strong></em></h4>
<p style="text-align: justify;">Luxembourg-based private equity group CVC Capital Partners acquired 15 per cent stake in PT Siloam International Hospitals, a clinics operator owned by Indonesian property developer Lippo Karawaci, in a Rp 2.2 trillion ($165-million) deal. The investment was made through share purchases from Lippo Karawaci and the group’s securities unit Ciptadana, as well as CVC’s participation in a proposed rights issue by Siloam.</p>
<h4 style="text-align: justify;"><em><strong>Mitsui &amp; Co &#8211; MatahariMall.com</strong></em></h4>
<p style="text-align: justify;">Indonesian B2C e-commerce platform MatahariMall.com announced a new equity round led by Japanese trading house Mitsui &amp; Co. Other undisclosed new and existing investors also participated in the round, which amounted to $100 million. The Lippo Group-controlled company said the funds would be used to improve market share, and to strengthen its position as the “leading e-commerce player in the country.”</p>
<p style="text-align: justify;"><strong>Also Read:</strong></p>
<p style="text-align: justify;"><span style="color: #ff0000;"><em><strong><a style="color: #ff0000;" href="http://www.dealstreetasia.com/stories/ey-report-pe-activity-in-southeast-asia-picks-up-in-3q-2016-thanks-to-grab-gojek-61554/" target="_blank">PE activity in SE Asia picks up in Q3 thanks to Grab, Go-Jek</a></strong></em></span></p>
<p style="text-align: justify;"><span style="color: #ff0000;"><em><strong><a style="color: #ff0000;" href="http://www.dealstreetasia.com/stories/go-jek-adds-products-to-dominate-indonesian-on-demand-services-59444/" target="_blank">Go-Jek to deepen range of on-demand services in Indonesia ahead of regional push</a></strong></em></span></p>
<p style="text-align: justify;"><span style="color: #ff0000;"><em><strong><a style="color: #ff0000;" href="http://www.dealstreetasia.com/stories/gic-navinfo-tencent-to-jointly-acquire-10-stake-in-here-61436/" target="_blank">GIC, NavInfo, Tencent to acquire 10% in open location platform HERE</a></strong></em></span></p>
<p style="text-align: justify;"><span style="color: #ff0000;"><em><strong><a style="color: #ff0000;" href="http://www.dealstreetasia.com/stories/singapores-gic-close-to-buying-stake-in-brazilian-education-firm-report-61340/" target="_blank">Singapore’s GIC close to buying stake in Brazilian education firm</a></strong></em></span></p>


If 2015 was considered the comeback year for Private Equity in Indonesia, then 2016 can well be called the period when PE activity in Southeast Asia's largest economy accelerated.

Indonesia 2016: Led by technology, PE transactions triple to $1.4b

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Indonesia 2016: Led by technology, PE transactions triple to $1.4b

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