0 Saratoga Keen to Offload 20% Stake in Finance Firm

Private equity fund Saratoga Capital plans to sell up to 20 percent of its holding in multifinancing company Mitra Pinasthika Mustika via an initial public offering within months. Saratoga official Kay Mock told the Jakarta Globe that Saratoga is preparing an IPO for MPM, an automotive multifinancing specialist, in June. Mock said Saratoga would sell between 10 percent and 20 percent of MPM, but did not disclose the targeted proceeds. He was speaking on the sidelines of an Asian Venture Capital Journal seminar in Jakarta on Tuesday. 

Morgan Stanley has been hired as an underwriter to help manage the share sales, he said, declining to identify other investment bankers involved. MPM, established in 1987, is the sole distributor of Honda motorcycles in East Java and East Nusa Tenggara. The company also produces motorbike lubricants and serves as an automotive dealership and financier. Saratoga also plans to sell a stake in Saratoga Investama Sedaya, a private equity unit in the group, via an IPO. Mock said he was unable to comment on SIS’s listing plans. Catharina Latjuba, a representative of Saratoga Capital, told the Jakarta Globe in January that SIS is expected to conduct its IPO in the middle of this year. 

Mock said that SIS was the holding company for the first private fund set up by businessmen Sandiaga Uno and Edwin Soeryadjaya under the Saratoga umbrella. Saratoga may raise more than $200 million from the IPO for SIS, it was reported in January. Other than these IPOs, Mock said, Saratoga is seeking business opportunities in other industries in Indonesia. “What we are focusing on are natural resources in Indonesia, infrastructure and consumer-related [opportunities],” he said. “We just recently committed to a toll-road transaction, so we are going to get involved in the toll road.” 

The toll road will stretch from Cikampek in West Java to Pademangan in North Jakarta, and will link to the Trans-Java toll road. Mock said the toll-road project was previously owned by Lintas Marga Sedaya, in which Saratoga is a minority investor. A 55 percent controlling stake in the company is held by Plus Expressway, a company partly owned by Malaysia’s Khazanah Group. Saratoga set up a new fund of $600 million in 2011, Mock said, of which $135 million has been “committed” for investment. Separately, Saratoga Capital has bought a 7 percent stake in Nusa Raya Citra, the construction arm of Surya Semesta Internusa, for Rp 105 billion ($10.8 million). 

“Saratoga will buy the stake through an IPO in May,” Johannes Suriadjaja, president director of Surya Semesta, said in Jakarta, according to a Monday report from Investor Daily newspaper. NRC plans to sell a 20 percent stake in May’s IPO, through which the company hopes to raise Rp 300 billion. The company has hired Ciptadana Securities to help it arrange the IPO. Surya Semesta currently holds a 83.3 percent stake in NRC, according to company data last year. NRC had total assets of Rp 837 billion as of December last year. Sandiaga and Edwin founded Saratoga in 1998, and the company now oversees more than $2 billion, according to its website. 

It closed its third fund in May 2012. Saratoga’s investments include Adaro Energy, Indonesia’s second-largest coal producer, and Tower Bersama Group, a provider of telecommunications infrastructure. The private equity firm plans to invest about $480 million, mainly in consumer-related companies, ahead of a planned initial public offering this year, it was reported in January. Saratoga Investama Sedaya, which owns the shares in Adaro Energy, was seeking to buy at least one consumer-related company, Edwin said in a recent interview, declining to name the target. Saratoga will team up with other investors because the deal may exceed the fund’s $90 million cap for a single project, he said. 

Edwin is counting on rising domestic consumption in Indonesia to boost returns as a slowdown in global growth has weakened prices of commodities such as coal and palm oil. Private consumption accounts for about 56 percent of Indonesia’s $850 billion economy, according to government data. Saratoga’s Asia Fund III manages about $600 million, of which around $120 million has been invested, Edwin said, adding that individual investments by the fund cannot exceed 15 percent of its total assets. Like other private equity funds, Saratoga’s business model depends on borrowing heavily to buy companies whose performance it believes it can improve, before later selling those companies at a profit.

Additional reporting from Bloomberg
source : the jakarta globe