Indonesia rice producer Tiga Pilar to sell 10 pct stake to KKR-Reuters

(Reuters) – Indonesian rice and noodle producer PT Tiga Pilar Sejahtera Food Tbk plans to sell 10 percent of itself to KKR & Co LP for 658 billion rupiah ($54.90 million), taking the U.S. private equity firm’s stake to around 25 percent.

Tiga Pilar will sell to KKR 292.6 million shares at 2,250 rupiah each by next week, and use the proceeds to expand into markets such as Malaysia and Vietnam, Director of Finance Sjambiri Lioe told Reuters by telephone on Friday.

A KKR spokeswoman said the private equity firm could not immediately provide comment.

Shares of Tiga Pilar rose as much as 2.3 percent in morning trade to 2,475 rupiah, compared with a high of 0.8 percent in the broader Jakarta market. The stock has risen 73 percent so far this year versus the benchmark’s 23 percent gain.

Tiga Pilar’s stake sale would come during a pick-up in investment in Indonesia following the July presidential election victory of Joko Widodo, who is widely regarded as pro-business.

Japan’s Mitsubishi Motors Corp and South Korea’s Samsung Electronics Co Ltd are among a range of companies to announce Indonesia investment plans recently.

“Strong investment flows have dialed up competition for deals, putting upward pressure on valuations. Too many private equity funds have been chasing a limited pool of large, attractive companies,” consultancy Bain & Company said in a recent report.

“Despite the short-term issues, Southeast Asia’s strong fundamentals make it one of the world’s most attractive developing markets,” it added.
In buying the shares, KKR would be raising its investment in a producer and distributor of rice and noodles.

Tiga Pilar also owns palm plantations through subsidiary PT Bumiraya Investindo (IPO-BRAS.JK: Quote, Profile, Research, Stock Buzz). It aims to raise up to 500 billion rupiah through an initial public offering of Bumiraya in December, underwritten by CIMB Securities, Lioe said.

In the first half of this year, Tiga Pilar earned 173 billion rupiah in net profit, 29 percent more than in the same period a year earlier.