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CLSA in Indonesian finance deal

Capitalising on Indonesia’s growing domestic consumption, CLSA Capital Partners has pumped in $20m to help multi-finance company Sinar Mitra Sepadan build stronger infrastructure and IT competence.

CLSA Capital Partners, the private equity arm of Asian brokerage house and investment bank CLSA Asia-Pacific Markets, has invested $20 million for a minority stake in Indonesia’s PT Sinar Mitra Sepadan Finance (SMS Finance).

According to a statement, the investment marked the firm’s first direct deal in Indonesia and was made from ARIA Investment Partners III, a $333 million pan-Asian vehicle closed in January 2007 that provides growth and expansion capital to mid-market companies.

Founded in 2001, SMS Finance is an independent multi-finance company that provides retail credit for purchasing pre-owned vehicles. The company has a pan-Indonesian network of more than 100 branches with more than 60,000 customers. It currently manages a loan book of over $450 million.

“We like Indonesia and its economy is reaping the twin benefits of increased domestic consumption and a boom in the price of natural resources. The need for transportation of natural produce along with increased consumer spending power has driven the demand for autos and auto finance. This sector has experienced significant growth in the past years, which we expect will continue to be robust in the coming future,” Richard Pyvis, executive chairman of CLSA Capital Partners, said in the statement.

The statement also noted that annual new vehicle sales in the country are expected to reach 1 million per annum by 2014.

Besides traditional financing, CLSA is also an investor in the microfinance sector. Early last year, the firm invested $24 million for an undisclosed minority stake in Chennai-based Equitas Micro Finance India.

With approximately $2.7 billion of assets under management, CLSA also manages a pan-Asian mezzanine fund, a Japan-focused growth and mid-market buyout fund, two pan-Asian real estate funds, a pan-Asian clean resources fund and a transportation fund, which made its maiden deal in December last year by acquiring a majority stake in Hong Kong-based dry bulk shipping services provider OSL Holdings for an undisclosed amount.