Khazanah gets US$500mil offer for Indonesia toll road

  • Corporate News
  • Saturday, 14 Sep 2019

KUALA LUMPUR: Khazanah Nasional Bhd, Malaysia’s sovereign wealth fund, received an offer of about US$500mil for its stake in an Indonesian toll-road operator, according to a source.

Indonesia’s Astra Infra teamed up with the Canada Pension Plan Investment Board (CPPIB) in bidding for PT Lintas Marga Sedaya, the concession holder of a 117km toll road connecting Jakarta to Cirebon in the western part of the Java island, said the source.

Khazanah’s board met yesterday to discuss the offer and the sovereign wealth fund may or may not accept it, the source told Bloomberg.

Khazanah controls 55% of Lintas Marga through its unit UEM Group Bhd, while Astra Infra owns the remaining 45% of the toll-road operator. The Indonesian company has first right of refusal on UEM’s holding in Lintas Marga, said the people. Astra Infra is wholly owned by car company PT Astra International.

The bidders are seeking to benefit from increasing traffic that’s prompted Indonesia to pledge more than US$400bil in infrastructure spending. Representatives for Khazanah, Lintas Marga, Astra Infra, UEM Group and CPPIB declined to comment.

In 2006, UEM Group was awarded the highway project, called Cikopo-Palimanan and also known as the Cipali toll road, but construction didn’t start until 2013 as the company needed to complete land acquisition and get the required regulatory approvals. The project was finished in 2015 and is the Malaysian group’s first highway concession in Indonesia.

The Cipali Toll Road starts at KM 72 Cikopo and connects five districts, namely Purwakarta, Subang, Indramayu, Majalengka before ending at KM 188 Palimanan, which is under Cirebon Regency.

Since operations began on June 13, 2015, the Cipali Toll Road has proven itself by shortening the Cikampek – Cirebon distance by 40 km, compared to the Pantura route.

Asia has received much interest from CPPIB. In early September, CPPIB invested US$115mil in SoftBank Group-and Carlyle-backed Indian logistics startup Delhivery, in a bid to broaden its exposure in the country’s logistics sector.

Delhivery provides transportation, warehousing, freight services, and overall fulfillment services to various customers in over 2,000 cities across India.

CPPIB routed the investment through Fundamental Equities Asia Group, which performs fundamental research and makes long-term investments in companies throughout Asia, it was reported.

As of June 2019, CPPIB’s equity investments in India totaled C$9.9bil across all asset classes. Other investments by CPPIB’s Fundamental Equities Asia in the country include Kotak Mahindra Bank, Alibaba Group Holding, Ant Financial, and Samsung Electronics.

CPPIB is the largest pension fund manager in Canada and one of its most active dealmakers. The Toronto-based fund also has investments in real estate in Malaysia.
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