EQT backs Indonesia flavors, fragrances player

“Indonesia is relatively consolidated in terms of F&F, this being one of the market leaders. It primarily serves Indonesia and wants to supply products throughout Southeast Asia. There are ambitions to grow inorganically [as well as organically] and that is where we can help them,” said Brian Chang, a partner and head of Southeast Asia at EQT. He identifies Vietnam as an interesting expansion market.

The private equity firm has not disclosed the size of its stake or the amount paid; merely that the founding Gunawan family will retain a majority position and continue managing the business.

The investment comes from EQT’s Asia middle-market fund, which closed at $800 million in 2018 and typically commits EUR40-100 million ($45-113 million) per deal in Southeast Asia. Indesso sits towards the upper end of this range, reflecting the GP’s desire to write larger checks. Asia Pacific PE head Simon Griffiths told AVCJ earlier this year that $100-300 million would likely be the sweet spot.

Established in 1968, Indesso supplies F&F to more than 2,000 customers across 50 countries. Most of its customers are domestic fast-moving consumer goods (FMCG) companies as well as a sprinkling of multinationals. Indesso usually sells ingredients to larger F&F houses that turn them into compounds, which are sold to manufacturers for use in everything from tea to toothpaste.

Chang noted that the global F&F market is worth $40 billion a year, but Indonesia has a competitive edge by virtue of a rich stock of raw materials. It is responsible for 80% the world’s patchouli, 80% of nutmeg, 75% of clove, and 40% of vetiver. Patchouli and vetiver are essential oils. Indesso is an expert in derivatives and botanical extracts from these oils that are unique to Indonesia.

“We are seeing a global shift to natural ingredient-based products, so you want supply chain traceability, and you want to be close to the source,” Chang added.

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• Topics
• Consumer
• Southeast Asia
• Expansion
• Indonesia
• EQT Partners
• Growth capital