TPG, GIC dig deep into Indonesian coal miner

The consortium has invested $400m in equity into Indonesian stock exchange-listed Delta Dunia Makmur. China Investment Corporation is reported to be joining as a third co-investor.

In yet another major Indonesia private equity deal, a consortium consisting of TPG Capital and the Government of Singapore Investment Corporation (GIC) has bought non-voting stakes in Indonesia Stock Exchange-listed coal mining contractor Delta Dunia Makmur.

A statement from existing shareholder of the company Northstar Tambang Persada (NTP), a holding company controlled by TPG partner firm Northstar Equity Partners which holds a 40 percent voting stake in the company, confirmed the transaction but did not disclose financial details. However, a source close to the deal told PEI Asia that the consortium had paid about $400 million in equity to buy the non-voting stakes in the company formerly held by local conglomerates Sinar Mas Group and Bakrie Group.

The source declined to comment on specific shareholdings following the deal, but noted that NTP’s 40 percent holding in Delta Dunia Makmur was also valued at about $400 million and that the “bulk” of the investment was made by TPG. NTP will continue to hold its stake in the company undiluted and will not lose any of its voting rights following the deal, the statement said.

The source declined to comment on reports that China Investment Corporation would be joining the TPG/GIC consortium in the next two to three days.

CIC, TPG and GIC did not comment by press time and Delta Dunia Makmur, Sinar Mas Group and Bakrie Group could not be reached for comment.

Delta Dunia Makmur is an Indonesian Stock Exchange-listed holding company and the parent of PT Bukit Makmur Mandiri Utama (BUMA), the second largest coal mining contractor in Indonesia. According to the company website, BUMA employed approximately 7750 employees, and owned and operated approximately 2900 units of heavy equipment used in coal mining and production as of June last year.

Delta Dunia has an enterprise value of around $1.7 billion, according to the source, who also noted that in terms of equity cheque, the deal stands to eclipse CVC Capital Partners’ Matahari acquisition as the largest private equity deal to have taken place in Indonesia.

This is not the first coal-related play made in Indonesia this year. In April, it was reported that Fang Fenglei’s Hopu Investment Management and the private equity unit of state-backed China Development Bank were holding talks with Indonesian state-owned coal mining company Tambang Batubara Bukit Asam to invest in a new rail project in Indonesia.