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TPG Takes Stake in LBO Firm Northstar

(Reuters) – TPG Capital has taken a direct stake in Indonesia buyout fund Northstar Pacific, a source said, in a move that strengthens the U.S. buyout firm’s foothold in southeast Asia.

No financial details were disclosed but the deal underlines growing private equity interest in the emerging economies of the region.

TPG has invested in Northstar funds as a limited partner since 2006 and since then the Indonesian firm has grown in scale through its relationship with the U.S. buyout firm, and as economic reforms have taken effect in the country.

TPG and Northstar have a long history of investing together in Indonesia. That has given TPG a headstart on investing in a country where local relationships with cash-rich family conglomerates are often key to winning deals.

Northstar closed its second Indonesia-focused fund on $235 million in March 2010, according to data provider Preqin, but a third fund has already been oversubscribed above $750 million, according to a second source.

TPG has invested in all three of Northstar’s funds as a limited partner, but has now moved to bring the Indonesian company under its umbrella of funds, taking around 10 to 20 percent of Northstar’s fund management company through a share swap, the first source said.

The sources declined to be identified as the matter was private. Northstar and TPG did not return calls requesting comment.
Northstar will hold less than 5 percent of TPG, said the first source.

The Financial Times reported TPG’s plans for a stake in Northstar earlier on Thursday.

TPG and Northstar combined to buy a controlling stake in Indonesia’s Bank Tabungan Pensiunan Negara in 2007.

Patrick Walujo and Glenn Sugita, the founders of Northstar, have close ties with Tim Dattels, a senior partner of TPG, from his days at Goldman Sachs in Hong Kong in the 1990s.

Ashish Shastry, TPG’s Singapore partner, will join Northstar and serve as a bridge to TPG, the first source said.

Walujo and Sugita will become senior advisers to TPG.

(Reporting by Stephen Aldred; Editing by Anshuman Daga)