Companies in Indonesia on capital raising drive
Indonesian firms are raising funds and deploying capital more aggressively than ever before as they battle for market share in the rapidly growing economy.
Many are also sniffing out merger and acquisition (M&A) opportunities both within and outside their home market.
At a media briefing last week, Standard & Poor's said that as the Indonesian economy continues to expand, more players are pouring into the market, leading to greater competition.
"With the intensification of competition comes the need for companies across sectors to maintain sufficient levels of investment in order for their market share to be maintained," said the director for Asia-Pacific corporate ratings, Xavier Jean.
"So we see somewhat more aggressive capital spending plans and this, in our expectations, could result in more aggressive financial policies and a higher usage of debt," he added.
Law firm WongPartnership, meanwhile, has seen more M&A deals involving Indonesia.
"We are talking to Indonesian clients shopping around the region, as well as regional players casting their eye over the large numbers of assets and businesses in the archipelago, not to mention those from much farther afield," noted corporate M&A partner Mark Choy.
"We're also advising on transactions where both parties are Indonesian and the asset is in Indonesia, with no Singapore element."
The firm recently advised Jakarta-listed Indofood Sukses Makmur in its S$90 million (US$72.5 million) acquisition of a 14.95 per cent stake in China Minzhong Food Corporation.
Singapore-listed First Reit, meanwhile, said last week that it had entered into agreements to acquire two new hospitals in Indonesia for S$190.4 million.
US$1 = S$1.24