Indonesia Investment Authority pitches for Australian super funds joint investments
Indonesia’s new $12bn sovereign wealth fund is urging Australian super funds to invest in what will soon become the world’s fifth largest economy.
Indonesia’s newly established sovereign wealth fund, the $US8bn ($12bn) Indonesia Investment Authority, is making a pitch to Australian super funds to invest alongside it in one of Asia’s largest economies.
In a visit to Australia this week, the fund’s chief executive officer, Ridha Wirakusumah, urged Australian super funds and the Future Fund to consider co-investing with it in areas such as infrastructure, healthcare, and digital commerce.
While Australian investors have been wary of the Indonesian market, he said they needed to start thinking “beyond Bali” and realise that Indonesia was on the way to becoming the fifth largest economy in the world, thanks to improving standards of corporate governance.
Mr Wirakusumah said INA already had more than $US25bn in commitments from sovereign wealth funds from around the world including the Government of Singapore Investment Corporation, the Abu Dhabi Growth Fund, the Abu Dhabi Investment Authority and the Kuwait Investment Authority.
Major pension funds, insurance companies and fund managers have also indicated interest to invest in key assets in Indonesia.
It has signed investment framework agreements with governments in the US, China, Denmark and the Middle East.
“Indonesia has never been one of the main destinations for Australian capital,” he said. “But some investors (from Australia) are now actively looking there now.
“My goal on this trip is to get the super funds to open their eyes and see what is going on in Indonesia. Given that Indonesia is on the way to becoming one of the top five economies in the world and is a near neighbour, it is worth considering.
“There is a lot more to Indonesia beyond Bali.”
Mr Wirakusumah, who is a former chief executive of one of Indonesia’s largest banks, Bank Permata, and a former head of US private equity company KKR’s operations in Indonesia, was a speaker at the Australian Council of Superannuation Investors’ conference in Sydney on Wednesday.
He said funding commitments to invest alongside INA were now being made by pension funds which were peers of the big Australian superannuation funds.
“Right now, many of my co investors are the peers of the Australian super funds. They have had an open mind to listen and understand what we are doing and then, potentially, to work alongside us,” Mr Wirakusumah said.
“More and more, people are saying that INA is a partner of choice to participate in the development of Indonesia.”
His visit to Australia follows meetings last year between Prime Minister Anthony Albanese and Indonesian President Joko Widodo.
Last August a group of major Australian superannuation funds, led by the chair of industry super fund vehicle IFM Investors, Greg Combet, and federal Financial Services Minister Stephen Jones, visited Indonesia.
Mr Wirakusumah said the INA, which was started with an initial investment of $US5 billion from the Indonesian government, was willing to work with global funds for investments which would also meet global standards of governance.
He said the fund was not only looking for global capital but was seeking the expertise in areas such as investments in infrastructure.
“We would welcome co investments with these funds,” he said. “But what we really need, often times, isn’t just capital but also expertise.
“We will also be building our governance and the way we do things – including due diligence and disclosure – on global standards. That’s why so many partners are coming to us.”
Mr Wirakusumah said the INA wanted to invest in infrastructure, including in toll roads, airports, seaports and logistics infrastructure as well as healthcare.
“We have just acquired the largest pharmaceutical company in Indonesia (Kimia Farma) which has the largest number of pharmaceutical outlets in the country, and we are doing due diligence on buying the largest hospital chain in the country,” he said.
“We are looking at almost every aspect of health care and we are actively seeking to co-operate with the global players in this sector.”
He said INA was also looking at investments in digital infrastructure such as fibre optics, data centres and telecommunication towers.
“We are buying the largest telecommunications tower company in Indonesia (Mitratel), with more than 35,000 towers, alongside names such as Singapore’s GIC, the Abu Dhabi Growth Fund and the Abu Dhabi Investment Authority,” Mr Wirakusumah said.
He said there was also the potential to invest in digital commerce which was taking off in Indonesia.
INA has so far done more than $US2bn in investments since its inception in 2021, which will rise to more than $US3bn by the end of the year.
It will have closer ties with the Indonesian banking system than outsiders, which could potentially provide better financing deals for global investors, rather than them going it alone investing in the country.
He said he knew that Indonesia had been “viewed negatively” as a potential destination for investment by Australian institutional investors in the past.
“But it is a journey. Indonesia has developed a lot more in terms of transparency and governance,” he said.
“It is an exciting market which needs to be considered or at least understood.
“If the Australian super funds are not comfortable about it yet, they should at least get to know it.”
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