Northstar leads $1b financing deal for Indonesia's Salim Group

The nature of the deal is not unusual in an Indonesian context. Given restrictions on direct foreign ownership in a range of consumer-facing industries, PE firms have eschewed traditional equity investments in favor of bonds that convert to equity once the target company lists. A relevant Salim asset is expected to pursue an IPO in due course, according to a source familiar with the situation.

Anthony Salim and family were ranked third in the 2015 Forbes Indonesia rich list with a net worth of $5.4 billion. The conglomerate's interests span the consumer, telecom, real estate and financial services sectors, with prime assets such as Indofood Sukses Makmur, the world's largest instant noodle producer.

The private equity financing is secured against shares in two Salim-owned assets: Hong Kong-listed First Pacific, which owns 25.6% of Philippine Long Distance Telephone, 50.1% of Indofood, and 50% of Goodman Fielder, as well as various infrastructure and resources holdings; and Indomaret, Indonesia's largest convenience store operator with nearly 11,300 outlets, 60% of them self-owned.

Salim is understood to be interested in building up capital and strategic support for an M&A push. The deal also comes at a time when Indonesia's capital markets are underperforming - prompting numerous companies to postpone capital-raising activities - and banks have become less aggressive in their lending policies.

Northstar invested through its fourth fund, which closed last month at $810 million. TPG was a backer of Northstar's early funds and the firms took minority stakes in each other in 2011. They have co-invested on a number of deals. Gateway Management is a Singapore-based investment firm set up by two former bankers from Standard Chartered.

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• Topics
• Financing
• Southeast Asia
• Expansion
• Northstar Group
• TPG Capital
• Growth capital
• Structured finance
• Southeast Asia
• Indonesia