Global private equity firm Warburg Pincus has invested $125 million in a joint venture partnership with a local real estate developer and operator, Nirvana, to develop retail malls in Indonesia.
The venture marks the firm’s first private equity investment in Indonesia. The equity has been invested from Warburg Pincus’ global private equity fund, Warburg Pincus Private Equity XI, which attracted $11.2 billion in its final closing in May 2013. The firm also has an option of investing an additional $75 million at a later period in the partnership.
Through the venture, the two firms will develop hypermarket-anchored shopping malls across second- and third-tier cities in Indonesia to capitalize on the growth potential driven by rapid urbanization, emerging consumption and outsized economic growth in these areas, according to a statement announcing the partnership.
The venture will be seeded with four operating assets and also has several projects in the pipeline, currently under development.
“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,” said Jeffrey Perlman, managing director of Warburg Pincus. “We are confident that Nirvana’s strong local sector knowledge and operational experience together with Warburg Pincus’ proven ability to assist our partners in realizing their full potential, will enable us to benefit from Indonesia’s long term growth and emerging middle class…”
The transaction is expected to close in the second quarter of 2015.
Warburg Pincus Private Equity XI also has another real estate investment in its investment portfolio. In May 2013, the firm invested $200 million via the fund to acquire a 20 percent stake in Vincom retail, a shopping mall owner and operator in Vietnam. That was the firm’s first investment in Southeast Asia.
In May last year, the Dutch pension administrator APG Asset Management invested up to $650 million for a 20 percent stake in the Warburg Pincus-backed e-Shang, a Chinese warehousing developer and operator. The firm also operates a $1.2 billion global real estate fund called Warburg Pincus Real Estate I, which was established in 2006.