Northstar closes in on fourth deal for $820m third fund
Northstar Pacific is poised to secure a fourth deal for Northstar Equity Partners III, which recently reached a final close of $820 million. The four transactions are expected to account for around 20% of the fund’s corpus, a source familiar with the situation told AVCJ.
The private equity firm originally targeted $500 million for its third vehicle and set a hard cap of $750 million. Northstar's second fund, which closed in 2010, raised $285 million.
Retail and financial services are likely to figure strongly among future investments, effectively leveraging rapid consumption growth in Indonesia.
Northstar has a strong track record in both areas. In 2006, it invested in Sumber Alfaria, which operates the Alfamart convenience store chain, took the company public in 2009 and gradually sold down its holding. Last year, the private equity firm exited a 28.52% stake to a consortium of five foreign buyers for around $50 million, which equated to a 203% return on its investment. In 2007, Northstar spent $200 million on a 71.6% stake in Bank Tabungan Pensiunan Nasional, which went public a year later and currently has a market capitalization of $2.4 billion.
The private equity firm's largest transaction came in 2009 and 2010, when it bought 40% of Delta Dunia for $350 million, which in turn acquired Buma, Indonesia's second-largest mining contractor. However, commodities deals are unlikely to be so prevalent in the future, the source said.
The size of the latest fund also means that Northstar will have less need for co-investors on transactions, although regular partners Government of Singapore Investment Corp. (GIC) and TPG are still expected to participate in deals.
Earlier this month, TPG and Northstar formalized their long-standing relationship through a share-swap agreement - thought to be a first for the Asia region. The US buyout firm now owns 10% of Northstar, which has a less than 0.5% interest in TPG. As part of the agreement, Ashish Shastry, a Singapore-based partner at TPG, will join Northstar, while Patrick Walujo and Glenn Sugita, the Indonesian firm's founders, will become senior advisers to TPG.
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