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PE boost for Indonesian malls

A US-based private equity investor has committed up to US$200 million in a joint venture to roll out shopping malls in Indonesia.

Nirvana Development, which describes itself as “an emerging real estate developer and operator” in Indonesia, has formed a joint venture with an affiliate of Warburg Pincus, a leading global private equity firm focused on growth investing.

WP, will commit US$125 million initially with an option to invest up to an additional US$75 million in the JV, which will build and develop a “best-in-class retail platform in Indonesia”.

In a statement, Nirvana said the venture will focus on developing hypermarket-anchored shopping malls across second- and third-tier cities in Indonesia to capitalise on the growth opportunities coming from rapid urbanisation, emerging consumption and outsized economic growth in these areas.

“This strategic partnership is founded on a common vision to expand Nirvana’s operations to benefit from one of the world’s fastest growing domestic retail sectors in a time when it is still vastly under-penetrated across the archipelago. The venture will be seeded with four operating assets and several pipeline projects, which are currently under development.”

The long-term vision is to create one of the leading retail platforms in Indonesia with institutional-grade malls in cities with sizable population centers and growing disposable incomes.

“With this plan, we will seek to enhance and expand our retail relationships to further deliver quality service and growth to our tenants and stakeholders,” said Wilson Effendy, Nirvana’s CEO.

“As we seek to scale quickly over the next few years, we look forward to benefiting from the wealth of experience and solid track record of the Warburg Pincus team in building out retail platforms globally and in Asia.”

Jeffrey Perlman, Warburg Pincus MD, added: “With a rapidly expanding middle class and a nascent modern retail sector outside of Jakarta, there is a meaningful opportunity to contribute to Indonesia’s consumption transformation. We are confident Nirvana’s strong local sector knowledge and operational experience, together with Warburg Pincus’ proven ability to assist our partners in realising their full potential, will enable us to benefit from Indonesia’s long-term economic growth and emerging middle class.

“Under the leadership of Mr Effendy and his strong management team, the new venture is poised to become one of the pre-eminent retail platforms in Indonesia.”

Subject to shareholder approval and the satisfaction of certain closing conditions, the parties expect the transaction to close at the beginning of the second quarter of 2015.

Nirvana Development, headquartered in Jakarta, has business activities spanning shopping centers, real estate, hotels and other sectors. The company’s key projects consist of Cirebon Super Block in Cirebon, The Park Solo in Solo, Borneo City Sampit Mall, Borneo Mall in Pangkalan Bun and Borneo City Ketapang Mall in Kalimantan.

Warburg Pincus has been active in Asia since 1994. Internationally, it has a proven track record as an investor in the consumer and retail sector, including retail brands Intime Department Store, Red Star Macalline, Mattel, Neiman Marcus, and Poundland.

Warburg Pincus’ portion of the equity for the Venture will come from Warburg Pincus Private Equity XI, which includes the consumer and retail investments in CAR Inc, China Kidswant and Vincom Retail.

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