* CVC to take up to 49 pct stake in First Media unit
* Partnership deal comes after scrapped stake sale
* First Media's stock jumps over 20 pct, vs index down 0.3
(Update with quotes, details of deal)
By Janeman Latul
JAKARTA, March 22 Private equity firm CVC
will invest $269 million in the cable TV and internet
business of Indonesia's PT First Media , in a deal that
reflects investor interest to tap growing consumer spending in
Southeast Asia's biggest economy.
The deal marks the second investment by CVC in the Lippo
Group, one of Indonesia's biggest conglomerates, and in
Indonesia, after its $790 million purchase of a department store
chain last year, and bankers expect more M&A deals in the
consumer and retail sector.
First Media, controlled by the Lippo Group, said CVC will
get a 49 percent stake in PT Link Net, a unit that provides
high-speed internet, cable pay TV and data communication
"This deal will also attract interest from other parties to
co-operate with First Media, or for small investors to invest in
its stock," said Winston Sual, a fund manager at Panin Dana
Maxima, which runs 5.5 trillion rupiah ($630 million) in funds.
Shares in First Media surged as much as 24 percent after the
announcement, and traded 13 percent up at 950 rupiah
by 0802 GMT, versus a Jakarta index down 0.3 percent.
The stock has been flat this year, versus the index's 5 percent
Foreign investors have sold a net $766 million in
Indonesian stocks this year on worries over inflation and as
funds move to developed markets and north Asia, though many are
still bullish longer term on Indonesia's prospects. The index
surged 46 percent last year on $2 billion of net foreign buying.
First Media said in January it had hired Bank of America
Merrill Lynch to conduct a strategic review of its business to
help the company identify various strategy and growth
Lippo had aimed to raise about $400 to $500 million from a
sale of their majority stake in First Media and gathered
interest from firms including South Korean's SK Telecom Co
and KDDI Corp , but the group saw bids as
"This will allow us to invest more heavily in much needed
telecommunication infrastructure," said Peter Gontha, First
Media's chairman, on the deal with CVC.
Inadequate infrastructure in the archipelago is seen as a
hurdle to growth and an investment opportunity. A growing middle
class, with salaries having risen over a quarter in the last
three years, is expected to drive demand for consumer products.
Intense competition for deals in hot markets like
China and India means global buyout shops like CVC, the Carlyle
Group , TPG and Blackstone are
increasingly pushing into fast-growing markets like Indonesia,
Malaysia, the Philippines and Vietnam, as they hunt for
Asia now accounts for almost one-fifth of overall
global private equity volume, and Thomson Reuters data shows $73
billion in dry powder in the region - money that was raised for
private equity investment but has not yet been put to work.
CVC has a total of 13.5 billion euros in investment capital,
and is actively investing in Asia from its CVC Asia III fund,
according to its website.
CVC usually seeks a controlling stake in companies, to
ensure the management control needed to turn assets around. But
in Asia minority stakes are the norm, and in Indonesia tycoons
are normally only willing to sell stakes of around 20 percent.
"A global private equity firm's entrance into a
company means that it will improve the firm's transparency as it
will put its people in to make sure the firm runs well," said
Panin Dana's Sual.
($1 = 8723.5 Rupiah)
(Additional reporting by Fathiya Dahrul in JAKARTA, Viparat
Jantraprap in BANGKOK and Stephen Aldred in HONG KONG; Writing
by Neil Chatterjee; Editing by Muralikumar Anantharaman)