SINGAPORE/HONG KONG (Reuters) – Indonesian private equity firm Northstar Pacific and U.S. hedge fund Farallon Capital are among investment firms interested in a stake in Indonesia’s top coal miner Bumi Resources (BUMI.JK: Quote, Profile, Research, Stock Buzz), according to sources close to the matter, a deal that may be worth over $1.5 billion.
Bakrie & Brothers (BNBR.JK: Quote, Profile, Research, Stock Buzz), Bumi’s largest shareholder with around a 30 percent stake according to bankers, needs cash to pay back loans borrowed using shares of the firms it controls as collateral. Global turmoil in financial markets has badly hurt shares of the Bakrie group.
Controlled by the family of chief social welfare minister Aburizal Bakrie, Bakrie & Brothers had total liabilities of 18.6 trillion rupiah ($1.89 billion) as of June and out of this 14.8 trillion rupiah were short-term liabilities, according to data from Thomson Reuters.
Sources say the family’s entire Bumi Resources stake is up for sale, and perhaps more than 50 percent of the company depending on the buyer. Bakrie & Brothers have said several Indonesian and foreign investors were interested in Bumi.
U.S. hedge fund Farallon is no stranger to Indonesia, with investments in PT Adaro Energy (ADRO.JK: Quote, Profile, Research, Stock Buzz) and PT Bank Central Asia (BBCA.JK: Quote, Profile, Research, Stock Buzz).
Northstar Pacific is run by Indonesian banker Patrick Walujo, a former Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz) banker, and has a joint venture with U.S. buyout firm TPG Capital. Northstar and Farallon were not available to comment.
Credit Suisse (CSGN.VX: Quote, Profile, Research, Stock Buzz), which has a long relationship with the Bakries both on the corporate and private banking side, is working to put together a consortium of investors to buy into the company. Credit Suisse declined to comment.
“I think there are a number of foreigners that would like to look at this, perhaps more likely a consortium,” said a source familiar with the deal.
Another source close to the deal said a foreign buyer interested in Bumi will likely want control of the firm, which has a roughly $4 billion market capitalisation. Bumi shares are down 75 percent since June when Bumi briefly enjoyed a spell as the firm with the biggest market value on the Indonesian stock exchange.
The Bakrie group has a stable of assets in Indonesia, including oil and gas, telecommunications and property companies. The coal business is the most sought after by investors because coal prices make it an attractive energy asset, making a deal more easy to be financed.
Sources say a foreign buyer is expected to link up with a local player to pursue the deal, allowing it to better navigate governnment approvals although by no means guaranteeing this will go through, given the problems several foreign investors have encountered in recent years.
Competition for a stake in Bumi looks mixed between foreign investment firms, local investment firms, and government backed coal companies.
According to Bisnis Indonesia newspaper, Indonesia’s state enterprises minister Sofyan Djalil said on Friday the government could allow state-owned mining firms PT Aneka Tambang Tbk (ANTM.JK: Quote, Profile, Research, Stock Buzz) and PT Tambang Batubara Bukit Asam (PTBA.JK: Quote, Profile, Research, Stock Buzz) to acquire Bumi shares.
Bakrie & Brothers said recently the global market meltdown had compelled it to “rationalise” its share portfolio in Bumi, Bakrie Telecom Tbk (BTEL.JK: Quote, Profile, Research, Stock Buzz), Bakrieland Development Tbk (ELTY.JK: Quote, Profile, Research, Stock Buzz), Bakrie Sumatera Plantations Tbk (UNSP.JK: Quote, Profile, Research, Stock Buzz) and Energy Mega Persada Tbk (ENRG.JK: Quote, Profile, Research, Stock Buzz).
Trading in the shares of three firms related to Bakrie group resumed on Friday, following an announcement late on Thursday that Avenue Luxembourg SARL had taken a 15.3 percent stake in Bakrieland for $46 million, while Longines had bought a 5.6 percent stake in PT Bakrie Sumatera Plantations Tbk for $10 million — nowhere near enough to help Bakrie meet its short-term debt repayments.
By Saeed Azhar and Michael Flaherty
(Editing by Sara Webb and Neil Chatterjee)