Exclusive: Och-Ziff among investors in CVC-owned Matahari $1.5 billion share sale - sources

HONG KONG Thu Mar 7, 2013 10:44pm EST

Cashiers from Indonesia's Matahari retail department store waiting for customers in Jakarta February 11, 2010. REUTERS/Supri

Cashiers from Indonesia's Matahari retail department store waiting for customers in Jakarta February 11, 2010.

Credit: Reuters/Supri

HONG KONG (Reuters) - CVC Capital Partners has secured about $200 million in initial pledges from cornerstone investors, including Och-Ziff Capital Management Group LLC and asset manager Schroders, for its up to $1.5 billion share offer in Indonesian retailer PT Matahari Department Store, sources with direct knowledge of the matter said.

CVC, a London-based private equity firm, is selling as much as a 40 percent stake in Matahari (LPPF.JK) in what is expected to be Indonesia's biggest share sale since a $4.4 billion offering by PT Bakrie & Brothers (BNBR.JK) in 2008. It is a test case for private-equity exits in Indonesia, which has seen a rush of investors seeking to benefit from rapid economic growth in Southeast Asia's biggest economy.

Goldman Sachs (GS.N) Investment Partners (GSIP) and hedge fund Lone Pine Capital are among the other cornerstones making initial commitments, though the final roster and the size of the commitments might change, said the sources.

This is the first time anyone has reported that CVC has secured a cornerstone investor for the share offering.

The offering is expected to be launched on Monday, added the sources, who were not authorized to speak on the record about the matter because details are not yet public. The shares are being marketed in a price-to-earnings ratio range of 25 to 29 times, they added.

The ratio exceeds those of most of its rivals because the company's annualized profit is expected to grow more than 40 percent over the next three years, according to how bankers are marketing the deal to potential investors.

Among its peers, PT Mitra Adiperkasa (MAPI.JK) is trading at a P/E ratio of 23.94 and PT Ramayana Lestari Sentosa (RALS.JK) is trading at a 19.36, according to Thomson Reuters data.

CVC has set a per-share price range of 10,000 to 11,250 Indonesian rupiah ($1.03 to $1.16) for the offer, the Wall Street Journal reported on Friday, citing sources familiar with the matter.

CVC declined to comment on the cornerstone investments, as did GSIP, Lone Pine and Schroders (SDR.L). Och-Ziff (OZM.N) did not return calls seeking comment on the Matahari offering.

EXIT DASH

CVC led a consortium to buy 98 percent of the Indonesian retail group in early 2010 for $790 million, in the country's largest-ever private equity deal.

The sale of shares in Matahari, the top department store operator in Indonesia with some 110 stores, will help CVC make a profit from one of its early investments in Southeast Asia.

Investors also are closely monitoring TPG Capital's majority stake, valued around $1.7 billion, in Indonesian lender Bank Tan Pensium Nasional (BTPN.JK), because the U.S.-headquartered firm's lock-up expires this month, sources have previously told Reuters.

A fast-growing economy is drawing private equity investors to Indonesia. Current growth rates would make the economy the world's seventh largest by 2030, from 16th now, according to management consultant McKinsey.

Thirty-six private equity funds are raising $11.6 billion for Southeast Asia, and the $5 billion raised for investment in the region in 2012 is the most since 2008, according to data provider Preqin.

Prospects of strong consumer spending in Indonesia had prompted Japanese retailer Aeon Co Ltd (8267.T) and Thailand's Central Group to consider bidding for Matahari, but differences over valuations hindered any deal.

SIGIT CONNECTIONS

CVC, one of the world's biggest buyout funds, is launching a new $3 billion pan-Asia buyout fund later this year, and a profitable exit from Matahari could help generate investor interest in the new fund.

CVC has been able to strike deals in the region frequently and part of its success has been attributed to the firm's head of Southeast Asia, Sigit Prasetya.

Prasetya spent three years convincing the Riady family to sell Matahari before clinching a deal, one person familiar with the matter said.

Earlier this year, CVC agreed to buy 80 percent of Philippine Long Distance Telephone Co's (TEL.PS) business outsourcing unit SPi Global Holdings.

It also closed a $1.7 billion buyout of the KFC fast-food franchises in Malaysia, together with the investment arm of Malaysia's Johor State, Johor Corp, and the Employee Provident Fund.

CVC hired CIMB Bank (CIMB.KL), Morgan Stanley (MS.N) and UBS (UBSN.VX) to manage the Matahari share sale. ($1 = 9692.5000 Indonesian rupiahs)

(Reporting by Stephen Aldred and Elzio Barreto; Editing by Denny Thomas and Chris Gallagher)

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