Uno May Spend $214 Million Buying Stakes in Consumer Goods Companies

Jakarta Globe, Bambang Djanuarto & Berni Moestafa, February 15, 2010

Indonesia offers “huge potential for companies in the consumer sector," says Sandiaga Uno. (Bloomberg Photo/Dimas Ardian)

Sandiaga Uno, the second-youngest of the nation’s 30 richest people, may invest in consumer companies this year as investors’ interest shifts toward tapping household demand in Asia’s third-most-populous nation.

Uno’s PT Saratoga Investama Sedaya, which manages about $1.5 billion in assets, may spend as much as Rp 2 trillion ($214 million) to buy stakes in consumer companies, he said.

Jakarta-based Saratoga is looking at opportunities in the retail, food and beverage, and pharmaceutical industries among others, Uno said.

The private-equity firm is betting on domestic consumption in Southeast Asia’s biggest economy to boost returns. The country avoided following its neighbors into a recession after nine rate cuts by the central bank bolstered consumer spending, which accounts for about two-thirds of gross domestic product. Fourth-quarter growth was the fastest in a year at 5.4 percent.

“The demographic type of investment that relies on strong sales because of the population and the rise in the middle class has become the new theme of investment,” said Uno, 40, whose fortune is estimated at $400 million. Indonesia offers “huge potential for companies in the consumer sector.”

Growth in Indonesia’s $514 billion economy has been supported by rising consumer confidence, which according to a central bank index rose in January to near the five-year high recorded in July when President Susilo Bambang Yudhoyono was elected to a second term.

Retail-sales growth in Indonesia increased to 33.9 percent in November, the fastest pace in two years. PT Matahari Putra Prima, the country’s biggest retailer, last month sold its stake in a department-store unit for Rp 7.2 trillion, or double the unit’s share price before the deal was announced.

“We’re seriously looking into which pockets of industries still offer reasonable valuations,” Uno said. “We expect to complete an acquisition this year.”

Still, a possible increase in interest rates and under developed infrastructure may hamper investments, Uno said. Bank Indonesia on Feb. 4 kept its key interest rate at a record low of 6.5 percent for a sixth straight month to support consumer spending.

Inflation increased to 3.72 percent in January, the highest in seven months. The central bank may need to “take monetary policy action” if inflation approaches or exceeds 6 percent, Bank Indonesia Deputy Governor Hartadi Sarwono said last week.

Saratoga owns 23.15 percent of PT Adaro Energy, Indonesia’s second-biggest coal producer. The company also has investments in telecommunications and palm-oil businesses.

While Saratoga remains “bullish on coal,” finding new investment opportunities in energy-related industries has been difficult because competition among buyers has driven up the valuations of these assets, Uno said. PT Benakat Petroleum Energy said on Thursday that it signed a deal this month to buy a 37.15 percent stake in oil-services provider PT Elnusa, beating Uno’s Saratoga.

The private-equity firm plans to meet investors on a road show at the end of this year or early 2011 to raise $300 million as more foreign investors express interest in Indonesia, Uno said.

“They’re suddenly starting to look at Indonesia because the growth story is there, the political and economic stability is there,” he said.

Bloomberg