KKR has named Jaka Prasetya as a managing director to lead its Indonesia coverage as part of its push to beef up its Southeast Asia team.
Prasetya was founder and former managing partner of Leafgreen Capital Partners, which finances midcap companies in the country.
In his role, Prasetya will work with KKR’s private equity, credit and special situations teams to develop the firm’s presence in Indonesia.
The appointment comes at an intriguing time for the Southeast Asian country, following governmental and presidential elections that ultimately anointed Joko “Jokowi” Widodo. The president-elect is under pressure to relax foreign investment rules that have at best been patchy but ultimately unwelcoming across various industries. But the lure is still potent.
“Indonesia continues to be a dynamic market for investment with great growth potential and positive demographics driving opportunities,” Ming Lu, KKR’s co-head of Asia private equity, said in a statement.
KKR has also appointed Rahul Bhargava and Allan So, both former partners and managing directors at Leafgreen, as directors.
They will be responsible for the firm’s credit business in Southeast Asia and will be supported by Prasetya. All three will be based in Singapore and all three appointments are effective Tuesday.
“The addition of Jaka, Rahul and Allan – who have a deep understanding of Indonesia’s local culture and business environment – greatly enhances our ability to partner with [local] companies,” said Lu.
Prasetya launched Leafgreen in 2011, targeting Indonesia, Malaysia and Singapore. Before this he was managing director and head of principle investments, Asia, at Raiffeisen Bank International.
He has also held a senior management position at Deutsche Bank, according to KKR’s statement.
Bhargava joined Leafgreen in 2013 after 12 years at Henderson Global Investors, where he was a founding member of its Asian private equity business.
So joined Leafgreen in 2011 following stints in Hong Kong at Societe Generale, Standard Chartered, Calyon, JP Morgan and Centre Solutions, and in New York with Salomon Smith Barney.
Challenging market
KKR has been active in Southeast Asia since 2005 and Indonesia, while a challenging market, has long held promise for companies and private equity firms.
Several PE firms are trying to emulate the success of local firms such as Northstar, which has a longstanding relationship with TPG. Blackstone, for example, opened an office in Singapore at the end of 2013 with a focus on Indonesia.
However, the country is a relatively tough market in which to execute deals as investment opportunities are still relatively small and ownership structures are opaque.
Anand Balasubrahmanyan left Carlyle in 2012 after struggling for about 4.5 years to source a deal and win approval from the US-based firm's investment committee.
Also, shifting attitudes towards, and regulation of, foreign investment have made the country something of an acquired taste for many foreign groups.
The outgoing government, for example, raised the ire of mining groups over the past 18 months by introducing punitive taxes on the export of raw materials in an effort to bolster domestic smelters.
Foreign miners cried foul, claiming the taxes amounted to a redrawing of work contracts. The stand-off is ongoing.
That said, the government has also recently revised rules on foreign investment broadly, easing restrictions on sectors such as advertising and electricity generation but tightening rules on certain energy investments.
Either way, deals are being done – albeit with a hiatus during the protracted and at times uncertain election season.
TPG and Northstar last year sold a 40% stake in Bank Tabungan Pensiunan Nasional to Japan's Sumitomo Mitsui Banking Corp at 4.5 times book, one of the highest prices fetched for an Asian bank.
Navigat, the gas-to-power group, raised $21 million from Indonesian investors to expand its network of power generators across Southeast Asia. Last year, KKR itself bought a 9.5% stake in Tiga Pilar Sejahtera, a local snack food maker.
“With urbanization, rising wages and a young and growing working class, we see excellent opportunities in Indonesia with good companies looking for varied financial solutions,” Prasetya said in the statement.
