KKR will acquire 10.44 percent of an Indonesian poultry, beef and animal feed company for $81.2 million, its first direct private equity investment in the market.
The deal for Japfa Comfeed Indonesia will come from a $52.9 million private share placing to KRR and a $28.3 million share sale by the agribusiness’s parent company, Japfa.
The sale leaves Japfa with a 51 percent stake in the subsidiary. Roughly 42 percent of Japfa Comfeed is publicly traded on the Singapore Stock Exchange.
“We see a great opportunity for Indonesia’s poultry market given the country’s rising middle class, favorable urbanisation trends and increasing protein consumption. Japfa is the right partner with which to capture these opportunities given its leading market position, experienced management team and strong focus on food safety,” said Ming Lu.
Protein producers in Indonesia face volatility from raw material costs, currency valuation and government regulation, according to a recent report from Singapore-based bank, DBS.
The transaction will be completed once PT Japfa Comfeed approves the issue of new shares at its extraordinary general meeting on 1 July.
The funding will allow the company to reduce its leverage ratio and give KKR exposure to Indonesia’s growing protein and feed market. Japfa Comfeed is a major supplier of poultry, beef and feed in Indonesia, with holdings in the aquaculture sector.
In Asia, KKR invests between $100 million and $500 million per company.
In July 2013, KKR hit the $6 billion target for its KKR Asian Fund II, according to PEI Research & Analytics. The firm’s first Asian Fund, closed in July 2006 on $4 billion.