KUALA LUMPUR -- The Canada Pension Plan Investment Board makes its first foray into Indonesian infrastructure with the purchase of a 45% stake in toll road operator Lintas Marga Sedaya, as Malaysia's sovereign wealth fund withdraws from the company.
"This deepens the fund's commitment to the Asia-Pacific region as well as our focus on investments in new markets with attractive return and risk characteristics," Suyi Kim, the investment board's senior managing director and Asia Pacific chief, said late last week.
The pension board did not disclose financial terms. DealStreetAsia this month exclusively reported the board's interest in acquiring a stake in LMS, the concession holder and operator of the Cikopo-Plimanan toll road. In a follow-up story, Bloomberg said the deal could be worth around $500 million.
The Canadian board said Thursday its investment will be in partnership with Baskhara Utama Sedaya, a wholly owned subsidiary of Indonesian road construction company Astra Tol Nusantara, or Astra Infra.
The pension board and Baskhara will jointly acquire a 55% stake in the toll road operator from a subsidiary of Malaysia's UEM Group, a construction and development company.
UEM is wholly owned by Malaysia's sovereign wealth fund Khazanah Nasional. The stake sale will mark Khazanah's complete exit from LMS.
Baskhara currently owns 45% of the toll road operator and raises its stake to 55% under the deal, while the Canadian board will hold the rest.
The 117 km road, also known as the Cipali toll road, is one of Indonesia's longest operational toll roads and represents a critical transportation link for the island of Java as part of the Trans Java Toll Road network. It serves as a thoroughfare within West Java, which is Java's most populous and fastest growing province.
"Cipali toll road provides [the Canadian investment board with] access to a vital infrastructure development supported by rising motorization rates in one of the most densely populated and economically productive regions in Indonesia," said Scott Lawrence, the board's managing director and infrastructure head.
The investment board serves the Canada Pension Plan, which helps provide contributors with retirement earnings and other benefits. The board's infrastructure group focuses on investing in quality, large-scale core opportunities with dependable, like-minded partners. As of June 30, it had invested 33.1 billion Canadian dollars ($25 billion) in infrastructure assets globally.
DealStreetAsia is a financial news site based in Singapore focused on corporate investment activity in Southeast Asia and India. Nikkei recently acquired a majority stake in the company.