Indonesian integrated real estate developer Lippo Karawaci has secured a $1,010 million funding programme, as part of a comprehensive strategic transformation plan to recapitalise the company, revamp its leadership team and re-focus its business on its three core competencies.
Furthermore, to deliver on the new business strategy, the company has announced a new leadership team which sees Lippo Group director John Riady appointed as Chief Executive Officer. He is joined by a experienced professionals in the management team including Surya Tatang as Chief Financial Officer, Peter Yu as Director of Projects, and Bret Matthew Ginesky as Head of Investor Relations.
In a release, the company said the $1,010 million funding programme comprises of $730 million of proceeds from a rights issue underwritten by the Riady family and $280 million of proceeds from the completion of its asset divestment plans.
The capital is set to right-size the company’s balance sheet through deleveraging and repayment of up to $275 million of debt obligations, provide it with around $290 million of liquidity buffer to fund debt interest and REIT rental obligations through year end 2020, and also unlock shareholder value through investments in existing key projects, for which the company is planning $100 million over the next three years.
As part of its transformation, the company has identified three core competencies to focus on going forward, which are: urban housing, lifestyle malls and healthcare – three segments which already has strong positions in.
In the urban housing segment, LPKR will focus on expanding its urban homes product and developing value-added mixed-use projects that cater to the rising mass affluent population segment in Indonesia, while it will also seek to maintain its market leadership in the lifestyle malls segment, capitalising on Indonesia’s strong domestic consumption theme, improve asset yields through proactive leasing and improved execution, as well as optimise returns through efficient asset recycling strategies.
For the healthcare segment, Lippo Karawaci says it will continue to provide the highest level of clinical quality and patient care, while seeking to deliver strong financial performance at its assets.
Commenting on his appointment as Lippo Karawaci’s new CEO, Riady, said, “I see great opportunities to build on what is today Indonesia’s leading integrated real estate developer, to drive operational excellence, focus, and a more disciplined approach to capital allocation.
A company under conglomerate Lippo Group, publicly-listed Lippo Karawaci boasts a total asset of US$3.4bn as at 31 December 2018. Its core business comprises urban residential developments, lifestyle malls and healthcare, while also involved in integrated developments, hospitality, township development and management, as well as asset management services.
The company develops and operates urban developments under listed subsidiaries Lippo Cikarang and Gowa Makassar Tourism Development, while also owning a majority stake in Indonesian private hospital network Siloam International Hospitals.
Lippo Karawaci also has two listed REITs in Singapore, namely First Real Estate Investment Trust and Lippo Malls Indonesia Retail Trust with US$1.0bn and US$1.4bn of assets under management respectively, as at 31 December 2018.