Global private equity firm KKR is investing US$81.2 million from its Asian Fund II in a 10.44% stake in Japfa Comfeed Indonesia, a subsidiary of Singapore-based farming and food company, Japfa Ltd. The company produces protein products such as chicken, beef, and milk, and protein-based consumer products for the Asian markets of Indonesia, China, India and Indo-China. It also owns and operates vertically integrated industrial scale farms that serve its downstream food processing activities.
KKR’s Asian Fund II closed at $6 billion in July 2013, making it the largest pan-Asian private equity fund. The fund follows on the heels of the firm’s $4 billion regional fund in 2007 and its $1 billion China Growth fund in 2010.
The Jakarta Globe reports that under the terms of the investment, Japfa will issue a private placement of 750 million new shares to KKR for a consideration of approximately $52.9 million, and will also sell 441.7 million shares in PT Japfa Tbk to KKR for an additional $28.3 million.
“We see a great opportunity for Indonesia’s poultry market given the country’s rising middle class, favorable urbanization trends and increasing protein consumption,” said Ming Lu, Co-head of Asia Private Equity at KKR in a press statement. “Japfa is the right partner with which to capture these opportunities given its leading market position, experienced management team and strong focus on food safety.”
KKR has had a presence in the Asia Pacific since 2005 and in Indonesia since 2013, however, this deal marks the firm’s first direct private equity investment in the Indonesian market.
“Indonesia holds tremendous opportunity given its dynamic economy, favorable demographic trends, and rising GDP per capita,” notes Jaka Prasetya, Managing Director at KKR Asia. “The market is on track to be one of the top-10 global economies within the next 15 years. KKR is committed to investing in the market and providing capital solutions to strong partners like Japfa,”
Other existing investments in Indonesia on the part of the firm include an investment in Tiga Pilar Sejahtera Food, a leading food business in the country, and investments from Mandala Energy, a KKR-backed Southeast Asian-focused oil and gas exploration and production company.
The KKR investment will give the firm exposure to the positive demographic and consumption trends in Indonesia and will strengthen Japfa’s balance sheet. The latter will improve the leverage ratio of the group and providing it with a capital gain of approximately $21.2 million from the sale of its shares upon approval from its shareholders at its extraordinary general meeting scheduled for July 1, 2016.
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GAI News staff