October 25, 2012 / 4:35 AM / in 7 years

UPDATE 1-Carlyle in first Southeast Asia deal with Indonesia tower stake-sources

By Stephen Aldred and Janeman Latul

HONG KONG/JAKARTA, Oct 25 (Reuters) - Carlyle Group is making its first investment in Southeast Asia, buying a stake of around 25 percent in a publicly traded Indonesian telecom towers operator for about $100 million, sources with knowledge of the deal said.

The investment in PT Solusi Tunas Pratama TBK (STP) , Indonesia’s fourth largest tower operator, underlines a growing trend of global private equity funds setting their sights on investing in Southeast Asia’s biggest economy.

Indonesia’s government has restrictions on foreign ownership of tower assets, but sources said Carlyle was able to structure the transaction so that it complied with the rules.

Carlyle declined to comment. STP did not respond to calls or emails requesting comment. The sources declined to be identified as details of the deal have not been publicly announced.

Washington D.C.-based Carlyle is one of the world’s largest private equity firms, with more than $150 billion under management. The firm arrived in Asia in the late 1990s, focusing its first wave of investments primarily in North Asia. For China alone, Carlyle has 42 past and present portfolio companies listed on its website.

The STP investment is not Carlyle’s first effort at investing in Southeast Asia, as the firm has scoped out deals in the region before. Reuters and other media reported last year that Carlyle took part in the auction to buy a minority stake in Indonesian unlisted packaged food company GarudaFood Group.

Indonesia is a hot destination for deal making, evident from the $10.1 billion that buyout firms are raising in Indonesia-focused funds, according to estimates from industry data compiler Preqin.

STP, which has a market value of $360 million, was founded in 2006. It has 1,322 towers, most of which are in and around Jakarta, according to the company’s website.


Carlyle is in the process of raising a $3.5 billion fund that will be its fourth for the region, sources have previously told Reuters. The third fund, closed in 2010, was $2.55 billion.

For Carlyle, striking a deal in Indonesia shows current and potential investors that the firm is broadening its portfolio across Asia.

Southeast Asia is enjoying a fundraising boom as global equity firms are tempted by its fast-growing economy and potential for further expansion. Indonesia, with a rising middle class that is spending more and more money, has become a particular focus for private equity.

Carlyle rivals such as Bain Capital, Blackstone and KKR & Co LP are also pouring money and resources into the region, and lining up bids for auctions, like the sale of an up to $300 million stake in Indonesian private healthcare operator Siloam.

News of the STP investment comes as Henry Kravis, co-founder of KKR and a pioneer of private equity investing, arrives in Singapore to open the firm’s first Southeast Asia office, where it will base a deals team to more closely cover the region.

When it comes to deal-making, Indonesia is a textbook case of high risk, high reward.

Any money allocated to Indonesia can be subject to wild swings in the local stock market and to unpredictable rule changes. Corruption remains a serious hurdle for foreign investments. But the payouts can be worth the headaches.

CVC has been in discussions on a possible sale of PT Matahari Department Store, seeking a price of more than $2 billion after paying less than half that amount for the company two-and-a-half years ago.

TPG has seen the value of its $195 million investment for 72 percent of local bank PT Bank Tabungan Pensiunan TPK grow to $2.2 billion since 2008, though the stake is locked up until 2013.

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