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KKR sees opportunity in Indonesia’s produce sector

The firm made its first direct investment in Indonesia in May, snapping up a feed manufacturer.

KKR sees Indonesian high-quality produce and packaged food as an opportunity as the country’s middle class consumes more protein.

The firm made its biggest direct investment in Indonesia in May, when it bought a $81.2 million stake in one of Indonesia’s largest agri-feed companies, Japfa Comfeed Indonesia.

KKR was eager to acquire the stake as it sees great potential in agrifeed as Indonesia’s rising middle class consumes more and more protein.

“The retail/consumer and food industry is something that we’ve been interested in given our recent investment. We particularly see opportunities around the production of high-quality produce and packaged food and snacks,” Jaka Prasetya, a managing director at the firm, said.

“With the rising popularity of convenience stores, hypermarkets and department stores, the food they stock will have value. Quick service retail, bakeries and snack foods are all investment opportunities, as there is a trend toward consolidation driven by generational shifts in private ownership and industry leaders.”

KKR started investing in Indonesia in 2013 in food business Tiga Pilar Sejahtera Food. The firm also provided pro bono technical assistance to Indonesian social enterprise East Bali Cashews, raising more than $2 million in investments to grow the company and increase its social impact.

When asked how Indonesia fits in KKR’s global private equity portfolio, Prasetya said: “KKR is committed to Indonesia in the long term. It’s our aim to be a partner to leading corporates looking to take advantage of the country’s very attractive growth prospects.”

According to data from the Investment Coordinating Board of the Republic of Indonesia, foreign direct investment in Indonesia rose 17.1 percent to IDR 96.1 trillion ($7.3 billion; €6.6 billion) in the first quarter of 2016, compared with the previous year.

The Indonesian government recently allowed foreign investors to acquire stakes of up to 49 percent in domestic industries that were previously off-limits, including the rubber industry, natural resources, transportation and energy.