US-based private equity firm KKR will acquire 12.64 per cent stake in Indonesia-listed bread maker company, Nippon Indosari Corpindo, for a consideration of $74 million, according to an announcement on Thursday.
The parties agreed on a share price of IDR 1,275 apiece.
KKR is now one of the largest shareholders in Indosari along with Salim Group’s Indoritel Makmur International, Yap family’s Bonlight Investments Limited, and Pasco Shikishima Corporation (owned by the Morita family).
KKR has invested from its $9.3 billion Asian Fund III – the biggest ever vehicle in the region – raised in July. KKR’s investment in Indosari is the firm’s third in a leading Indonesian company in less than 18 months.
Managing director at KKR Asia, Jaka Prasetya, said that the investment underscores the company’s belief in the continued growth of the country’s consumer sector.
“KKR is focused on partnering with strong Indonesian entrepreneurs to provide assistance and capital to home-grown, local champions like Indosari. We believe that, with its focus on delivering premium, high-quality products to consumers, Indosari is well-positioned to capture opportunities across Indonesia and overseas,” Prasetya stated.
Evercore Asia, Singapore-based investment banking advisory firm, advised the KKR-Indosari deal.
“The transaction represents one of the largest ever transactions in the bread industry in Asia, and heralds a new phase of growth for Indosari,” said Chairman of Evercore Asia, Keith Magnus.
Headquartered in Indonesia and founded in 1995, it is one of the pioneers in the country’s mass-produced, branded bread segment. Marketed under its own Sari Roti brand, Indosari produces and sells a wide range of bread and cake products across its 67,000 points of sale. Indosari’s manufacturing features Japanese technology equipment spanning 10 manufacturing facilities across 8 different cities in Indonesia.
Commenting on the investment by KKR in Indosari, Ms. Wendy Yap, Founder, President Director & Chief Executive Officer of Indosari, said: “Indosari will benefit from KKR’s knowledge and experience in the consumer sector and look forward to drawing on their longstanding expertise and full support to accelerate the growth of the business and position the company for long-term success.”
KKR’s private equity business manages over $68 billion in assets under management worldwide. The firm is now stepping up investments in Asia while reducing its US equity position to 17 per cent from 19 per cent.
KKR’s recent big-ticket Asia investments include its acquisition of Japanese firm Hitachi’s chip-making equipment and video solution unit in a $2.3 billion deal that followed an earlier acquisition of Hitachi’s power-tool unit Hitachi Koki Co for $1.3 billion earlier this year.
The US buyout group said that Asia “will account for a full 62% of total global growth this decade, compared to a more modest 43% during much of the prior two decades.”
Its key focus markets in Asia include Indonesia, India, Vietnam, and China.
In Southeast Asia, KKR is particularly bullish about Indonesia and sees a greater opportunity for private equity to play in sectors such as technology, e-commerce, education, entertainment and healthcare.
Henry McVey, KKR’s head of global macro and asset allocation team, has noted Indonesia’s macro economic health, including balanced deficits, stable currency, and accelerating infrastructure.
“We came away from our trip believing that Indonesia has — at least on the macro front — finally begun to visibly turn its long-term potential into near-term economic and investment realities,” McVey had said in a report.
“Indonesia has emerged as somewhat of a pure-play on our thesis that large, domestic economies will prosper in a world that now favors domestic agendas over global ones,” he stated.
KKR has been investing in and providing financial solutions to companies in Indonesia since 2013. In recent years, its appetite for investments in the country appears to be increasing. Last year, KKR along with Warburg Pincus, participated in Go-Jek’s $550 million fundraising, the largest ever for an Indonesian startup. The round was estimated to value Go-Jek at over $1.3 billion. It also invested $80 million into Japfa Comfeed Indonesia, a local unit of Singapore’s agri-food producer Japfa Ltd.
The PE firm has also invested in Mandala Energy – a Southeast Asia-focused oil and gas exploration and production company – and in Tiga Pilar Sejahtera Food, one of Indonesia’s leading food businesses.