Exclusive: Northstar readies $950m fund launch

Patrick Walujo’s firm expects to exceed the target for its fourth Southeast Asia vehicle.

The Northstar Group will launch its fourth private equity vehicle in the coming weeks, targeting $950 million, a source with direct knowledge of the matter has revealed to Private Equity International.  

The target amount excludes the GP commitment, but after gauging investor interest Northstar expects to collect more from its external investors, PEI’s source said. The hard cap has not yet been decided. 

Headquartered in Singapore, Northstar invests in Southeast Asia, however has a strong bias toward Indonesian companies in a wide range of sectors.

While not disclosing specific investors in the fund, the source added that it will mostly be made up of existing investors and only a handful of new investors.

The Government of Singapore Investment Corporation was also noted as a “long-standing investor and partner” of Northstar, but has not yet been confirmed as an LP in Northstar Equity Partners IV.

GIC teamed with Northstar on three of its largest deals including the acquisitions of Delta Dunia in 2010 and palm oil company Triputra Agro Persada in 2012, as well as its investment in Indonesian bank BTPN.

Northstar sold a partial stake in BTPN along with its global private equity partner TPG Capital in May 2013, agreeing to sell a total of 40 percent across two deals, PEI reported earlier.

The firms did not disclose the exact deal value, but a source close to the matter confirmed to PEI earlier that the two exits combined could be worth a total of $1.52 billion and represent a return multiple of 7x for the private equity duo.

Northstar now aims to make a first close around March or April for its latest offering, keen to start investing quickly.

“Indonesia is going to go through a slightly more difficult time this year,” PEI's source explained. “Part of that is the currency depreciating significantly last year, it is in the middle of elections, which creates a level of uncertainty, so for people like Northstar it is a good time to be investing.”

The firm has a “pretty big pipeline”, although not all of it is priced correctly due to entrepreneurs with high expectations when valuing their businesses in Indonesia.

“Its pipeline is very good, but I’d say the terms still probably have to improve a little bit on many of the deals it’s looking at. But over time if they stay engaged and whittle away at these guys, things will move in their favour.”

Southeast Asia is an increasing priority for investors tapping emerging markets. 

Pan-Asian private equity firm Navis Capital Partners has a strong focus on Southeast Asia and last week filed a disclosure with the US Securities and Exchange Commission shortly after media reported in December it had raised $860 million towards a first close on its $1.3 billion seventh fund.

The Northstar Group was co-founded by Goldman Sachs veteran Patrick Walujo and Glenn Sugita, former vice president at Goldman’s Indonesian partner Bahana Securities.

Northstar says it has invested over $2 billion with its co-investors across Southeast Asia and has a 40-strong investment team. It is currently investing from Northstar Equity Partners III, which is an $820 million vehicle and about two-thirds deployed.