Canada Pension Plan Investment Board (CPPIB) on Thursday announced its first infrastructure investment in Indonesia with the purchase of a 45 per cent stake in toll road operator PT Lintas Marga Sedaya (LMS).
LMS is the concession holder and operator of the Cikopo-Plimanan (Cipali) toll road. CPPIB did not disclose financial terms of the deal.
Earlier this month, DealStreetAsia had exclusively reported CPPIB’s interest in acquiring a stake in LMS. In a follow-up story, Bloomberg said the deal could be worth around $500 million.
In its statement on Thursday, CPPIB said it will invest in the toll road operator in partnership with PT Baskhara Utama Sedaya (BUS), a wholly owned subsidiary of PT Astra Tol Nusantara (Astra Infra).
CPPIB and BUS will jointly acquire a 55 per cent stake in LMS from PLUS Expressways International Berhad, a subsidiary of UEM Group. UEM is wholly owned by Malaysia’s sovereign wealth fund Khazanah Nasional. The stake sale will mark Khazanah’s complete exit from LMS.
BUS currently owns 45 per cent of LMS and will up its stake to 55 per cent, with CPPIB holding the rest. No financial details of the deal were disclosed.
“As CPPIB’s first infrastructure investment in Indonesia, this deepens the fund’s commitment to the Asia-Pacific region as well as our focus on investments in new markets with attractive return and risk characteristics,” said CPPIB senior managing director and Asia Pacific chief Suyi Kim.
At 117 km, the Cipali toll road is one of the longest operational toll roads in Indonesia and a critical link in the transportation network of the island of Java, as part of the Trans Java Toll Road network. It serves as a thoroughfare within West Java, which is Java’s most populous and fastest growing province.
“Cipali toll road provides CPPIB access to a vital infrastructure development supported by rising motorization rates in one of the most densely populated and economically productive regions in Indonesia,” said CPPIB managing director and infrastructure head Scott Lawrence.
CPPIB’s Infrastructure group is focused on investing in quality, large-scale core opportunities with dependable, like-minded partners. As at June 30, 2019, it had C$33.1 billion ($25 billion) invested in infrastructure assets globally.