Asia Awards: Exit of the Year – Matahari Department Store

Matahari prevailed with the voters, much as it has with investors since the March offering. The stock is trading at IDR11,050, up marginally on the sale price, and has held steady during a period in which the Jakarta Composite Index dropped by as much as 25% on concerns about the slowing economy.

"For any public marketing offering, you need to take advantage of the window. The timing was good with Matahari, but even with the recent sell down, the stock price is holding up," SigitPrasetya, managing partner for Southeast Asia at CVC, told AVCJ in November. "People see through the market volatility and recognize a good quality business with a high scarcity value because it is the leading retailer in Indonesia and probably in Southeast Asia as well."

CVC and Multipolar, a vehicle owned by the Riady family's Lippo Group, raised $1.3 billion by selling approximately 46% of Matahari. The pricing of the share placement valued the entire company at close to $3.3 billion, or 27x 2013 forward EBITDA.

It reflects an appetite for the Indonesia consumption story that Prasetya says holds firm despite the recent volatility. "If you look at the secular trends - Indonesia being a large population, a young population and a middle-income growing population - they are still there."

PE investors can be patient and take advantage of these swings, provided they can access the deals - and in Southeast Asia large transactions remain few and far between. Prasetya estimates that, in the last five years, there have only been about 20 deals in the region with an enterprise value of more than $200 million.

Matahari was a proprietary transaction, sourced through connections to the Riadys. CVC bought a 72.6% stake in the company from a Lippo-controlled entity in early 2010 at an enterprise valuation of $892 million. CVC and Multipolar then set up an 80-20 joint venture which owned approximately 98% of Matahari.

It is one of eight CVC investments in Southeast Asia since 2007, of which only two came via auction.

"If there aren't many deals and everyone shows up to an auction, then whoever wins usually overpays for the asset," Prasetya added. "However, valuations are not everything. Most of the big investment banks have been active in Southeast Asia for a while now, so the level of intermediation is good. But in most cases, if a family or business group wants to sell, there is a reluctance to hire a bank and do a full auction for face considerations."

(The award was collected by Roy Kuan, pictured, Asia managing partner at CVC Capital Partners.)

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• Topics
• Exits
• Consumer
• Southeast Asia
• Buyouts
• Exit
• IPO
• CVC Capital Partners
• Consumer
• Indonesia
• AVCJ Awards