INDONESIAN businessman Erick Thohir, whose investments have ranged from newspapers to sports teams in the US and Europe, is now betting on life insurance.
A group led by Thohir plans to invest 2 trillion rupiah (US$149mil) to gain full ownership of Asuransi Jiwa Bumiputera, a new unit of century-old mutual insurer AJB Bumiputera 1912, the insurance firm’s statutory manager says. He prevailed over Zurich Insurance Group AG and Samsung Life Insurance Co, which had also expressed interest in the Jakarta-based business, after its owners decided they didn’t want to bring in foreign investors, AJB Bumiputera 1912 coordinating statutory manager Didi Achdijat tells reporters in Jakarta.
Asuransi Jiwa Bumiputera aims to start life insurance operations early next year after receiving the investment from Thohir’s consortium, statutory manager Adhie Massardi says. AJB Bumiputera 1912, Indonesia’s first national insurer owned by its customers, had been exploring options to raise at least US$1bil from a sale of its business to an overseas investor following a restructuring, people with knowledge of the matter said in October.
“The potential of the insurance industry in Indonesia is huge,” Agus Pramono, head of research at Jakarta-based PT Danareksa Securities, says by phone. “Insurance penetration in the country is still very low. The market leaders here are the foreign insurers, and there are many Japanese and European companies who want to enter Indonesia.”
A representative for Zurich Insurance declined to comment. A press official at Samsung Life said it had reviewed the possibility of investing in the Indonesian insurer before deciding not to proceed with an offer.
For Thohir, a 46-year-old media mogul who co-owns the American soccer team DC United, venturing into uncharted territory is nothing new. That spirit is evident on his Twitter page where he writes, “it’s kind of fun to do the impossible”.
The Indonesian businessman led a consortium in 2013 that took over FC Internazionale Milano SpA, known as Inter Milan. In June, Chinese retailer Suning Holdings Group Co says it will buy 70% of the Italian soccer team for 270 million euros (US$281mil), though Thohir’s investor group will retain a 30% stake in the club and he will remain as its president.
He previously owned a stake in the Philadelphia 76ers, the US professional basketball team, with others including actor Will Smith. Thohir is still an investor in DC United, the Major League Soccer team based in the US capital.
Thohir founded PT Mahaka Media, which publishes Indonesia’s Republika daily newspaper and Golf Digest magazine, in addition to broadcasting television and radio stations. The company employs more than 1,000 people, according to its website.
The dealmaker, who was named after Viking explorer Erik the Red, comes from a prominent wealthy family. His father, Teddy Thohir, was the co-founder of PT Astra International, one of the country’s biggest automakers. Thohir’s brother, Garibaldi Thohir, is the president director of coal miner PT Adaro Energy.
“Most of my investments is five to ten years, not just a year or two years,” Thohir said in a Bloomberg Television interview in 2013. “When I do other business, I want to be one of the best.”
The insurance industry’s huge funding requirements could pose a challenge to Thohir, who will need to bring in industry experts to turn around Bumiputera’s fortunes, according to Danareksa’s Pramono.
“Thohir is a very well-regarded businessman in Indonesia, with a good track record of turning companies around,” Pramono said. “He is a good dealmaker and very well-connected.” – Bloomberg