Proterra Investment Partners is currently in talks with 10 Indonesian companies operating in the food and agricultural business for potential investments or partnerships in an effort to make a bigger footprint in the country.
According to Proterra’s managing partner Tai Lin, the investment firm is looking to increase its investment proportion in Indonesia as it sees the country as a promising region for its food and agricultural strategy.
For the time being, the US-based investment firm is currently managing about US$200 to US$300 million investments in the country which is equivalent to about 10 percent of its total assets under management of US$2.5 billion.
“Indonesia is well-endowed with so many natural resources, coal, ore, and various metals, and it has lots of coastlines – but other than aquaculture, it does not have the ability to produce food product themselves. So they import as much sugar as China, even though China has six times more people,” said Lin.
“Besides, Indonesia is often known for exporting only two types of commodities which are palm oil and cocoa. So it’s a very interesting geography for us, not only because of the consumption, and population and growth, but also because of the natural deficit of food products and agriculture products,” he added.
But despite the interest in the country, Proterra is not looking at an Indonesia-focused fund yet. The company, instead is looking to partner with local, pan-Asia companies to target the Southeast Asia’s largest market.
In May 2017, Proterra invested US$100 million for a minority stake in Indonesian firm FKS Food & Agri, which would be used to expand the company’s food processing and logistics capabilities. The firm also owns 40 percent in malik producer Greenfields and partners with the Jafpa family.
“If you look at the agricultural space in Indonesia you have three big companies: Charoen Pokphand, Japfa, and FKS,” said Lin. “We were the first partners with Japfa and FKS, and so you can say that we are part of the ecosystem in a way. If other opportunities come up, we sit and talk together.”.
Founded just last year, Proterra Investment Partners was formed when America’s multinational corporation Cargill Inc. decided to spinoff most of its assets from Black River Asset Management subsidiary into a new private equity firm.
Proterra currently operates three agriculture-focused vehicles, three food-focussed funds and one vehicle that targets metal and mining.
For Indonesia, the investment firm is currently investing from its US$700 million latest vehicle, and it has deployed a little over half of this vehicle. Its Indonesia investments is through its Food Fund strategy, with exposure ranging from US$15 to US$150 million.