LTC Partners Asia how to unlock Indonesia opportunities. Overview and team capabilites

Transcription

1 LTC Partners Asia how to unlock Indonesia opportunities Overview and team capabilites 1

2 Agenda Overview of Indonesia Out top sector picks LTC Partners overview and value add 2

3 Overview of Indonesia The Indonesian archipelago at a glance NORTH SUMATRA The most populous province in Sumatra. Capital is Medan, the largest city outside Java (2.1m) KALIMANTAN Five provinces with an economy based on forestry, oil, gas and coal production SULAWESI Economy dominated by export crops and fishing. Largest city is Makassar (1.3m) MALUKU AND PAPUA Five provinces with an economy based on forestry, oil, gas and coal production WEST SUMATRA Capital city is Padang, a major port. JAKARTA The capital city is also a province in its own right. Its population of 11m is overshadowed by neighbouring West Java, with 47m EAST JAWA Population of over 39m people including Surabaya, the second largest city in Indonesia. BALI Economy based on tourism and agriculture. Sumatra (10 provinces) 50 million Jawa (6 provinces) 142 million Kalimantan (5 provinces) 15 million Bali & Nusa Tenggara (3 provinces) 13 million Sulawesi (6 provinces) 17 million Maluku and Papua (4 provinces) 6,2 million 3

4 USD Bn Indonesian has a young population and a large and growing economy About 110 million Indonesian are below 25 years old More than 150 mln people belong to the middle class Indonesian population by age ,5 21,7 mln Malaysia Vietnam Population with over 3000 USD annual household disposable income ,4 Thailand ,9 110 mln Philippines ,6 Indonesia mln Indonesia is the largest economy in SEA Robust GDP growth expected to continue Nominal GDP by country in South East Asia Indo Thai Mal Sing HK Phil Viet Myan Camb Source: World Bank 8% 7% 6% 5% 4% 3% 2% 1% 0% Indonesia GDP growth % 6,2% 6,5% 6,2% 5,8% 5,0% 5% 5,1% 5,3% 4,8% F 2018F 4

5 IDR Tn FDI are expected to reach a historical high, with Asian investors in the front line FDI are expected to reach an all-time high in 2017 FDI to Indonesia F Mining, industrial machineries and real estate represent the lion s share of investments TOTAL: IDR 97,1 Tn (USD 7,3 bn) 43,9 1Q17 FDI by sector IDR Tn 6,7 16,0 9,3 10,6 10,6 Mining Machineries & electronic Real Estate Electricity, Gas & Water Transport Equipment Others Key Remarks The Indonesian government took significant steps to improve the overall atmosphere of the market in 2016 by consolidating political and economic stability and through structural reforms that have removed some investment risk In 2016 a new investment regulation has been issued to open up to foreign investment sectors that were previously closed as: Healthcare, IT and telecom, Trade and Tourism In May 2017, Indonesia has been awarded investment grade by S&P Global Ratings, bringing it in line with Moody s Investors Service and Fitch Ratings Singapore, followed by Japan and China is the biggest investor in Indonesia TOTAL: IDR 97,1 Tn (USD 7,3 bn) 29,3 5,3 8,0 1Q17 FDI by origin IDR Tn 8,0 27,9 18,6 Singapore Japan China USA South Korea Others 5

6 Tn IDR Indonesia is running a moderate trade surplus, exporting commodities and importing machinery and electric equipments Key remarks Indonesia is highly dependent on commodity trading Indonesian imports and export have been reducing in the least 5 years as a consequence of the weakening of the mining and resource sector Imports in Indonesia are subject to significant taxes and other non-tariff barrier to entry Indonesia is part of part of the Asian Economic Community (AEC) agreement among 10 ASEAN countries which allows free movement of goods and services with 0% tax Indonesia runs a moderate trade surplus Non oil and gas import and export balance Export Import Balance Machinery and electric equipment represent 31% of the total non oil imports to Indonesia MACHINERY ELECTRICAL EQUIPMENTS PLASTIC & PLASTIC ARTICLES IRON AND STEEL VEHICLES ORGANIC CHEMICAL CEREALS ARTICLES OF IRON OR STEEL FOOD WASTE AND ANIMAL FODDER OPTICALS AND MEDICAL EQUIP COTTON MISCELLANEOUS CHEMICAL Indonesia non oil imports RUBBER FERTILIZERS CHEMICALS Mln USD 6

7 The Italian presence in SE Asia and Indonesia is far behind other European countries but slowly growing in importance Italy is far behind in its export to SE Asia vs. other EU comparable countries Despite a large world share of exports, Italy has a particularly weak position in ASEAN 30% 27,1% Italy share of EU export to SE Asia 25% 20% 15% 10% 5% 17,5% 12,0% 8,4% 3,4% 2,9 % of world s export share 8 th exporter in the world 0,9 % of export to ASEAN share 23 rd exporter to ASEAN 0% Germany France UK Italy Spain The Italian government has been putting a strong focus on Indonesia in the least years and Italy has a better position in Indonesia vs. the rest of ASEAN countries Italy and Indonesia have been strengthening commercial ties and cooperation in recent years: In 2009 Italy and Indonesia signed a MoU for the establishment of Bilateral Consultation Forum President Mattarella has been visiting Indonesia in 2015 In 2017 the ASEAN foundation organized the first ASEAN forum in Jakarta with Enrico Letta and over 150 companies Top 10 Italian exports to Indonesia 2016 USD mln Washing and bottling machines 255,0 Pharma and chemicals 102,0 Valves 98,6 Rubber processing machines 52,7 Engines 47,6 Air pumps 44,2 Tobacco products 44,2 Specialized machinery 40,8 Heating machinery 35,7 Paper machinery 34,0 Automotive 28,9 Steam turbines 28,9 Total 1,7 bn 16 th exporter to Indonesia 7

8 Large and small Italian companies are more and more active in the Indonesian market Several large Italian companies have been investing in Indonesia with a long term horizon nevertheless Indonesia is a perfect playground also for SMEs Over 60 SMEs companies Registered with the Italian Trade Agency in the last 3 years 55% of Italian imported products are made by SMEs Several hundreds new Italian food and cosmetic products registered for imports since 2016, mostly is imported by local distributors Indonesia Food and Drugs Control Officer 8

9 Agenda Overview of Indonesia Out top sector picks Tech Industry Energy Healthcare LTC Partners overview and value add 9

10 Overview of our top picks for Indonesia Despite the very promising macro-economic picture and the government efforts to promote foreign investment, Indonesia is a challenging place for investors. Common problems, afflicting large and small companies alike, include: excessive red-tape, frequently changing regulations, corruption and unreliability of local counterparties. Managing and mitigating local risks is mandatory to successfully invest in the country; the key aspects are: Have a complete understanding of the project and its complexities Partner with a reliable domestic player with a strong reputation, clean track record and ability to secure local coverage LTC Partners has been operating in a variety of sectors in Indonesia including: oil and gas, energy, finance, healthcare, luxury, media, tech and logistics Thanks to a long in-country presence LTC Partners leverages on a wide local network of reputable business partners, investors and get access to high quality projects 10

11 Agenda Overview of Indonesia Out top sector picks Tech Industry Energy Healthcare LTC Partners overview and value add 11

12 USD Bn mln The tech sector has prodigious numbers 73 million Smart phone users 132 million Internet users 106 million Active social media users 8H 31M Average daily time on screen Smartphone is the preferred access to internet for Indonesians, the number is expected to reach 87 mln by Number of smartphone users in Indonesia F 2018F 2019F Ecommerce market growth shows no signs of slowing and it is set to almost double in size by 2019 Cash remains the predominant mean of payment as only a small part of the population has access to alternatives B2C ecommerce Sales in Indonesia 23,0% 23,2% 22,1% 21,6% 10,3 25% 20% Preferred means of payment in Indonesia 2016 Penetration of non cash means of payments ,0% ,7 7,0 8,5 15% 10% 5% 65,3% 13,9% 20,7% Bank transfer Credit Cards Cash on Delivery 1,0% 5,0% Sales Change 0% Debit Card Credit Card Internet banking 12

13 Overview of the Indonesian tech industry Fintech: Indonesia has a low penetration of traditional financial service; it is expected that financial services will grow alongside technology fintech is attracting the vast majority of the 2017 VC investments in the tech industry Ecommerce: the industry is expecting to undergo significant consolidation as giants as Alibaba and Amazon enter the market - marketplace services are expected to evolve into payment gateways and fintech sector this year SaaS: Software as a Service is a relatively new to Indonesia, but with a potential of 60 mln local SMEs, the potential is huge SaaS companies are focusing on education to bring traditional businesses into the new tech On demand: Go-Jek, Grab and Uber are dominating the on-demand services industry on-demand services have grown into several varieties, including housemaids, house cleaning and AC repair services Over half of the 71 investments closed in 2016 were seed and pre series A Undisclosed; 18% PE; 2% Series B; 4% Series A; 24% Deals closed in 2017 by type Pre seed; 3% Seed; 40% Pre A series; 7% Fintech is set to dominate the investment focus in % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Capital allocation in the tech sector 2016 Others; 6% Music; 3% Events; 3% Education; 3% Soc media; 3% Edutech; 3% HR; 4% Game; 4% Agriculture; 4% Analytics; 4% Online media; 4% Medical; 5% On demand; 13% Fintech; 20% Ecommerce; 21% Intention of investment allocation in tech in 2017 Others; 10% Software as a service; 20% Fintech; 60% Ecommerce; 10%

14 Agenda Overview of Indonesia Out top sector picks Tech Industry Energy Healthcare LTC Partners overview and value add 14

15 GW Overview of Indonesia 35 GW plan PLN is the state monopolist in charge of electricity production and grid operation Indonesia requires about 81 GW installed capacity by 2025 This level of power generation will requires investments of at least US$32 billion by PLN, and US$78 billion by IPPs PLN will also need to invest around US$44 billion for expansion of the transmission and distribution networks The current scheme award contracts to IPP based on a competitive auction with expected returns between 8% to 18% p.a. depending on the locations and technology Indonesia is the 4 nation in the world in terms of planned additional electric capacity Additional capacity expected from IPPs are expected to contribute the most to Indonesia power capacity PLN IPP Unallocated Indonesia power capacity Additions 2025 About 38% of additional generation capacity will be based on renewable sources IPP opportunity split by technology 137 China India USA Indonesia Japan Russia GW TOTAL: 46 GW 8,8 8,0 2,9 1,9 5,8 26,9 Steam Geothermal Gas Hydro Solar Other 15

16 USD Cents Investments and tariff overview The Ministerial Decree of the Minister of Energy and Mineral Resources number 12/2017 regulates the purchase of electricity from various technologies. All renewable energy tariffs will be capped at 85% of the local PLN generation cost, if this price higher than the national average generation cost If the local generation cost is the same or lower than the national average, then the limit will be 100% of the local generation cost Average cost of generation by area ,6 16,9 11,7 12,4 13,5 13,7 14,2 14,5 14,7 10,0 8,0 8,8 9,0 5,6 5,7 5,8 5,9 6,3 6,9 6,9 7,0 National average USD 7,5c 16

17 Agenda Overview of Indonesia Out top sector picks Tech Industry Energy Healthcare LTC Partners overview and value add 17

18 mln mln The Indonesia HC sector is booming thanks to the NHI In 2013 Indonesia has introduced a National Health Insurance plan (JKN) to be completed by 2019 A 35% increase in National Insurance members triggered a 15% increase in care seeker Population covered by the National Health Insurance 250 millions 148 mlillions Members of national insurance and care seekers 157 Pre JKN Members of National Insurance People seeking outpatient care Healthcare spending is expected to grow from USD 27bn in 2015 to USD 37bn Components of Public and Private Sources of Funding for Healthcare Services in Indonesia Other Private OOP 0,25 0,54 15,34 10,3 Private Insurance Public 27 bn 0,29 0,66 20,4 16, bn CAGR 3,0% 4,1% 5,9% 9,6% Key trends in healthcare in Indonesia 1. Lifestyle Diseases on the Rise 2. Steady implementation of the universal healthcare 3. Increase in number of private hospitals 4. Aged-care is expanding in Jakarta 5. Indonesian is becoming a regional manufacturing hub for pharmaceutical products 6. Indonesia mobile and high-tech healthcare is undergoing strong development 18

19 The companies in HC are planning a rapid expansion Local companies shave been gearing up for expansion According to the Foreign Investment Coordinating Board, principle license issued to investors in pharma, hospital and medical equipment sectors totalled USD 1.1 billion in 201 The top 4 hospital groups in Indonesia are committed to build a combined 35 hospitals within the next 2 years Novartis, Merck, Bayer, Boehringer Ingelheim, and Pfizer - have invested more than USD 1 billion to increase production capacity in Indonesia in the last 3 years In August 2016 private equity firm CVC Capital Partners Ltd sold 15% of the hospital operator PT Siloam International Hospitals Tbk for USD 166 million; Siloam is owned by PT Lippo Karawaci Tbk, an Indonesian property developer Malaysia-based private equity firm Navis Capital Partners has acquired a stake in Tawada Healthcare, one of the largest medical device distributors in Indonesia Foreign ownership restrictions in healthcare business have been relaxed by the BKPM 67 % Foreign ownership in hospital 85% Foreign ownership in pharmaceutical Key figures and development plan of top hospital companies in Indonesia Top hospital companies # of hospitals In construction Beds Revenues 2016 (USD) Specialists Total staff Siloam Hospital 23 hospitals 22 hospitals beds 397 mln Mitra Keluarga Hospital 12 hospitals 6 hospitals beds 187 mln Omni Hospital 3 hospital 2 hospitals 354 beds 48 mln Mayapada Hospital 2 hospital 5 hospitals 485 beds 44 mln

20 Agenda Overview of Indonesia Out top sector picks LTC Partners overview and value add 20

21 Services LTC Partners PT LTC Partners Asia ( LTCP ) is a multi-services advisory firm based in Jakarta; we assist companies in conducting business in Asia with focus on Indonesia With over 10 years of combined experience in Indonesia, LTCP professionals are experts on local business, strategy and finance. Our team is a blend of investment bankers and consultants with extensive professional experience LTCP main areas of expertise: Business Lines Investment Lines FINANCIAL ADVISORY CONSULTING BUSINESS ORIGINATION DIRECT INVESTMENTS VALUATION STRATEGIC & MANAGEMENT CONSULTING FILING AND INCORPORATION EQUITY MERGER & ACQUISITION DISTRIBUTION DEBT CORPORATE FINANCE PRICE POINT COMPETITIVE INTELLIGENCE 21

22 LTC Partners value add Access to deals in Indonesia Access to decision makers LTC Partners has privilege access to a pipeline of deals in Indonesia and South East Asia Deals are cross sectors with a specific focus on: Energy, Real Estate, Financial Institutions, Retail, Healthcare, IT&Tech and Logistics Direct access to companies decision makers (owners, c-level management) leveraging on strong personal relationships; Asian conglomerates/groups are managed by few people culturally there is no delegation of power Local presence More than 10 years of combined presence in Indonesia Among the few corporate advisory companies based in Indonesia with international background Ability to manoeuvre the local landscape through public/private high level access Access to Asian capital LTC Partners supports Asian companies and HNWIs to access sell-side opportunities in Europe Opportunities may be cross-sector with a minimum ticket of USD 30 mln 22

23 2017 LTC Partners - track record June 2017 May 2017 April 2017 April 2017 Financial advisory mandate M&A mandate M&A mandate M&A mandate Leading Korean construction company building the first Korean Hospital in Indonesia Advertising agency focused on consumer goods and financial institutions Leading RE property software management system Company Leading provider in Continental Europe of banking credit information RSB Healthcare February 2017 February 2017 January 2017 January 2017 Financial advisory mandate Financial advisory mandate M&A mandate Financial advisory mandate Indonesian State-owned oil&gas and renewable energy company Vice is a Canadian-American digital media and broadcasting company Kuadobox is the largest Vietnamese ecommerce company for giftboxes RSBH developed a cluster of 4 budget hospitals in Java 23

24 2016 LTC Partners - track record November 2016 April 2016 April 2016 March 2016 Business origination mandate Business origination mandate M&A mandate Financial advisory mandate Indra develops proprietary technologies and solutions for various sector Smithsonian is the world's largest museum, education, and research complex Goldentree is an asset management firm specialized in debt opportunities SBY Presidential Center is the project promoted by the former President of Indonesia Susilo Bambang Yudhoyno January 2016 Financial advisory mandate Damiani is a leading company in the manufacturing and trade sector of jewellery 24

25 LTCP was appointed exclusive advisor of former Indonesian President Susilo Bambang Yudhoyono SBY Presidential Centre: former Indonesian President Susilo Bambang Yudhoyono appointed LTCP in exclusivity as project manager for the creation of the first presidential centre in Southeast Asia. LTCP was in charge of: SBY Presidential Centre Overview Concept definition Support the Presidential team in identifying functions, activities and key structures of the Presidential Centre 6 Financial planning Develop a full package business plan including projections, capex/investment scenarios and financing requirements 5 2 Legal structuring Define the broad legal framework of the project LEGEND : 1. WELCOMING HALL Fund raising Intensive fund raising campaign targeting: a) Indonesian business groups b) multinational corporations c) HNWIs d) foreign Governments; e) Sovereign wealth funds f) similar entities that aspire to establish a footprint in Asia 2. MUSEUM 3. LIBRARY 4. ART GALLERY 5. AUDITORIUM 6. SBY INSTITUTE 25

26 CONTACT US LTC Partners Asia Summitmas II, Ground Floor Jl. Jendral Surdirman Kav Jakarta Indonesia T F info@ltcpasia.com 27