US-based investment firm General Atlantic will tap Indonesian market for the first time. It has agreed to subscribe to Rp1.08 trillion ($75 million) in bonds issued by PT Mitra Adiperkasa (MAP) Tbk (MAPI), the local operator of global brands such as Starbucks and Cold Stone.
According to the agreement, MAP will consolidate four food and beverage (F&B) units under a new subsidiary called PT MAP Boga Adiperkasa (MBA). The total equity of the four units is Rp 170 billion.
MAP and the new holding company will then issue zero-coupon bonds that will be absorbed by General Atlantic, who will be given the option to convert them into shares totaling 29.9 percent of MBA when it goes public.
MAP vice president VP Sharma did not specify a timeline for the initial public offering (IPO), but said General Atlantic has committed to stay in the long term, maybe for “four to six years”. The deal itself is expected to close by year-end.
“Why did we pick General Atlantic? We share the same values, the same criteria. That was what we were looking for in a partner,” said Sharma in Jakarta.
Sharma added that the fresh funds will be used to expand the Starbucks chain and the F&B business in general. The company is aiming to open 50 to 60 Starbucks stores per year for the next couple of years.
The MAP’s food and beverage segment, which also includes Pizza Express, Krispy Kreme, and Godiva, contributed about 18 per cent to the company’s operating profit in 2015. This is after MAP sold part of its stakes in Burger King and Domino’s Pizza to QSR Indoburger and Everstone Capital Asia.
However, F&B business director Anthony Cottan believes there is still promising future for the segment. He said there is “a lot of potential” to grow the brands.
“The majority of our food and beverage business is Starbucks with only 242 stores across the country. That is just the beginning of our journey. Look at China and Japan who have at least 1,000 stores each,” he said.
The group earned Rp 12 trillion in revenue last year. After 25 years of operation, MAP now has around 2,000 physical stores scattered around 60 cities in Indonesia.
MAP landed a similar deal with CVC Capital Partners for its sports and kids’ clothes businesses in 2015. It issued Rp 1.5 trillion in bonds to Montage Company Limited, a unit of CVC, who has the option to convert them into 30 per cent of shares in five years time.
CVC is a global private equity and investment firm that had successfully invested in PT Matahari Department Store Tbk (LPPF) – an Indonesian retailer controlled by the Lippo Group. It profited from its investment in 2013 in a major offloading through a $1.3 billion IPO.