UPDATE 1-Temasek to enter Indonesia's hypermarket business

Mon Feb 4, 2013 5:14am EST

* Temasek to buy 26.1 pct stake in retailer Matahari

* Lippo's Multipolar to buy the $300 mln stake for Temasek

* Matahari is Indonesia's No.2 hypermarket operator

JAKARTA, Feb 4 (Reuters) - Singapore's state investor Temasek Holdings will indirectly buy a 26.1 percent stake in Indonesia's second biggest hypermarket-chain operator worth $300 million via PT Multipolar, as it aims to tap growing consumer demand in Indonesia.

Temasek, via its unit Anderson Investments, will buy the $300 million equity-link instrument issued by a unit of Multipolar and then it will use the fund to buy a 26.1 percent stake of PT Matahari Putra Prima from the market, said Multipolar's corporate secretary Chrysologus Sinulingga.

The deal, if materialised, will ultimately make Temasek one of the major shareholders in Matahari, beating international retailers such as Wal-Mart Stores Inc which have been trying to buy into the company over the last few years.

Multipolar, which is controlled by Indonesian conglomerate Lippo Group, is the controlling shareholder of Matahari with a 50.2 percent stake.

"It's a win-win deal for Temasek and Lippo," said Jemmy Paul, equity fund manager at Jakarta's PT Sucorinvest Asset Management. "Temasek finds consumer exposure in Indonesia given the hypermarket growth story, while Lippo is able to find a strong partner."

Foreign direct investment reached a record high in Indonesia last year. Growing domestic consumption, along with increased public spending and investment, has pushed GDP growth to over 6 percent for the past two years.

Hypermart is Indonesia's second-biggest hypermarket chain operator after PT Carrefour Indonesia, with 81 outlets in the world's fourth most populous nation.

However, Hypermarket growth has been challenged by minimarkets over the past few years as middle class consumers in Southeast Asia's biggest economy are shifting their preference to minimarkets over their large rivals.

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