Falcon House’s Indonesia breakthrough

Glenn Yusuf, who ran the Indonesian Bank Restructuring Agency following the Asian financial crisis, initiated the partnership, bringing in Brian O’Connor, formerly a senior executive at Lehman Brothers, and Samir Soota, previously managing director of South and South East Asia at EMP Global. Falcon House Fund I (FHF I), which launched in September 2011 with a target of $200 million, recently reached a final close of $212 million.

Of the first-time Indonesia-focused vehicles that have emerged since 2011 when the country returned to prominence in private equity circles, it is only the second to close. The first was Capsquare Asia Partners, which raised $82.5 million. Meanwhile, Forte Capital and Fairways Capital pulled their funds before launch, Antara Capital has stalled, and Mahanusa and Yawadwipa are status unknown.

FHF I reached a $100 million first close in August last year after International Finance Corporation (IFC) came in as an anchor investor, putting in $25 million. With Overseas Private Investment Corporation, Germany’s DEG and the Netherlands’ FMO are also said to have made commitments, development finance institutions account for around 30% of the total corpus, according to a source familiar with the situation.

The fund reached its $200 million target back in July but became oversubscribed after receiving additional commitments from an unnamed European investor at the last minute. The rest of the capital comes from a mixture of institutional LPs, predominately US-based, including pension funds and funds-of-funds.

FHF I, which has a lifespan of 10 years a target IRR of around 25%, will provide growth capital to mid-market firms, seeking both significant minority transactions and buyout opportunities with an emphasis on the consumer sector. It is looking to make around eight investments, predominantly in the consumer sector, with a transaction sweet spot of $15-25 million.

“Indonesia has turned a corner, the fundamentals are pretty good and there is huge gap in the mid-market,” the source added. “The rupiah has also weakened by 20% against the dollar, so that works to your favor if you are sitting on a lot of dry powder. Theoretically transactions have become 20% cheaper.”

According to AVCJ Research, Indonesia fundraising has reached $200 million or more in five of the last six years, largely driven by the country’s four longer-standing GPs – Northstar Group, Saratoga Capital, Quvat Management and Ancora Capital Management. The latter reached a final close on its second fund at $128 million last month.

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• Topics
• Southeast Asia
• Fundraising
• Funds
• Fundraising
• Growth capital
• Indonesia
• Falcon House
• Southeast Asia