MDI Ventures, the venture capital arm of Indonesia’s state-owned telecom firm Telkom Indonesia, is set to launch a new fund of up to $500 million, according to the country’s State-Owned Enterprise Deputy Minister Budi Gunadi Sadikin.
Speaking at Microsoft’s Devcon/Indonesia Digital Economy Summit 2020, Sadikin, who referred to the new fund as “Telkom’s second fund,” said the ministry will support the launch of the new fund.
“The commitment that I will give as part of the ministry is that I will push and approve of Telkom’s second fund. The size will be around $300 million to $500 million,” he said in a panel discussion with Indonesia’s Education and Culture Minister and former Gojek co-founder and CEO Nadiem Makarim.
The fund, which Sadikin says will be launched “very very soon,” will be essential for Telkom’s business given the lacklustre telco industry in Indonesia, which is seeing high capex, declining Ebitda and flattening revenues.
“So we have to move from digital infrastructure to digital platform and digital services. That’s why we need transformation. We need to invest in these startups,” Sadikin said.
The new fund was alluded to by MDI Ventures managing partner Kenneth Li when he told DealStreetAsia in January that the VC firm will be launching a seed-stage fund, as well as a later stage vehicle this year.
The fund will follow MDI’s existing funds, a $40 million fund with Telkom subsidiary Telkomsel, and a growth-stage fund with South Korea’s KB Investments with a corpus of $150 million.
The launch of multiple funds by MDI Ventures has been spurred by the success of its first fund of $100 million (corpus later increased to $150 million) which maintained a 35 per cent IRR and saw seven exits since its launch in 2015.
However, the firm has been without a CEO for over half a year after the departure of Nicko Widjaja, who left the firm after five years to take the helm at the newly formed BRI Ventures, the CVC of Indonesia’s largest lender Bank Rakyat Indonesia.
BRI Ventures is the latest Indonesian state-owned enterprise to set up a VC arm. Telkom was the first to establish a CVC unit among Indonesian banks, followed by Bank Mandiri that launched Mandiri Capital Indonesia in 2016.