KKR has invested in Indonesian bread producer Nippon Indosari Corpindo, the private equity firm announced on Thursday, marking its third deal in the archipelago over the last 18 months.
The global private equity firm will become the third largest shareholder in Jakarta-listed Indosari after taking a 12.64% stake through the latest investment round.
KKR did not disclose the size of its investment,based on Indosari’s market value of Rp8.4 trillion ($620 million) as of the end of Wednesday a stake of that size would be worth about $80 million.
Indosari shares rose about 6% early Thursday following the announcement.
By investing in the country’s largest bread producer, KKR is betting on the continued growth of the consumer sector driven by higher disposable income and a growing middle class.
KKR is investing at a time when consumption of wheat-based products is growing significantly in a country that is one of the world’s largest consumers of rice. Such increase consumption is a reflection of Indonesians’ growing consumption power as they seek higher-quality staple food such as bread and noodles.
“We believe that, with its focus on delivering premium, high-quality products to consumers, Indosari is well-positioned to capture opportunities across Indonesia and overseas,” said Jaka Prasetya, managing director at KKR Asia.
Indosari is a leading name in Indonesia’s consumer staples sector and has a dominant 90% share of the country’s bread market.
The company markets a wide range of wheat-based products under the Sari Roti brand, one of the few premium brands of mass-produced bread and cakes. The company operates 10 factories across multiple states with total daily production capacity of four million pieces of bread.
Prior to investing in Indosari, KKR took a stake in Indonesian agri-company Japfa Comfeed in June last year, and motocycle-hailing app Go-Jek two months later. All these investments underline KKR’s confidence in Indonesia’s consumer market, as it sees the emerging market as one of the most attractive investment destinations in Southeast Asia due to its large domestic consumption.
Indosari is the first major investment under KKR Asian Fund III, a $9.3 billion Asia-focused fund that the private equity firm raised in June. It is the largest private equity fund in Asia-Pacific.