Warburg inks first Indonesia deal

The firm will invest in real estate developer and operator Nirvana from its eleventh private equity fund

Global private equity firm Warburg Pincus has entered a strategic partnership with Indonesian shopping malls operator and developer Nirvana Development, according to a statement.

The two firms have formed a joint venture in which Warburg will invest $125 million, with an option to invest a further $75 million at a later date. The amount invested by Nirvana was undisclosed.

The deal marks Warburg’s first in Indonesia and was made from the firm’s $11.2 billion Warburg Pincus Private Equity XI, a global vehicle that closed in May 2013.

The venture will focus on developing hypermarket-anchored shopping malls across second- and third-tier cities in Indonesia, hoping to capitalise on the growth potential driven by rapid urbanisation, emerging consumption and outsized economic growth in these areas, according to the firm.

“With a rapidly expanding middle class and a nascent modern retail sector outside of Jakarta, there is a meaningful opportunity to contribute to Indonesia’s consumption transformation,” Jeffrey Perlman, managing director at Warburg, said in a statement.

The deal is still subject to certain closing conditions and shareholder approval, with the firms expecting it to close at the beginning of Q2 this year.

Warburg has been active in Asia since 1994, having made a number of consumer and retail investments in the region, including CAR, China Kidswant and Vincom Retail. Vincom retail, a Vietnamese shopping mall owner and operator, was Warburg’s first investment in Southeast Asia. The firm bought a 20 percent stake in the business for $200 million in May 2013.