'Jabar Fund' signed to raise funds for infrastructure

'Jabar Fund' signed to raise funds for infrastructure

Zakki P. Hakim, The Jakarta Post, Bandung

The opening of the West Java Infrastructure Summit saw the
provincial administration sign a memorandum of understanding with
a consortium of securities firms led by PT Dhanawibawa
Arthacemerlang to develop infrastructure in the province.

In Thursday's MOU dubbed the "Jabar Fund", the consortium
agreed to support fund raising for the development of roads,
ports, water treatment and power plants and telecommunications
facilities in the province.

"This is not a public offering. It is a collective investment
contract with fund managers and Bank BNI as the custodian bank.
It will be limited and closed in nature," Dhanawibawa president
director Felia Ayudita told The Jakarta Post on the sidelines of
the summit, where the provincial government is inviting investors
to participate in 57 infrastructure projects worth Rp 35 trillion
(US$3.52 billion).

The fund would be limited to 49 investors on first-come-first-
serve basis, she said.

A "closed" contract meant investors had to honor their
commitments until the investment matured; a time period of
between five and 15 years depending on the portfolio, she said.

As they were mostly start-up projects, the fund would be in
the form of equity shares, where the return would be in the form
of capital gains and dividends, Felia said.

Dhanawibawa and other consortium members -- PT Treasure Fund
Investama, PT Asia Financial Networking, Merrill Lynch Indonesia,
PT Trimegah Securities and PT Andalan Artha Advisindo -- are
expected to support fund raising to help the administration
convince investors to directly invest in the infrastructure
projects.

The perfect candidates to participate in the fund would be
sophisticated investors and international financing institutions
such as the Asian Development Bank (ADB), the Islamic Development
Bank (IDB) or infrastructure fund institutions from other
countries, such as from Malaysia, Felia said.

International practice saw fund managers commonly holding up
to 20 percent of equity in one project or company, she said.

Dhanawibawa expected to start offering the fund in November
after its fund manager finished forming a portfolio of feasible
projects after assessing them all thoroughly, she said.

West Java Governor Danny Setiawan said the development of
infrastructure projects needed up to Rp 50 trillion a year from
investors, which would help the province boost its economic
growth from the current 5 percent to 8 percent over the next five
years.

He said there were up to 200 infrastructure projects in the
province, but the administration had selected and prioritized
only 57.

The event was organized in cooperation with the province's
Chamber of Commerce and Industry (Kadinda), consulting firm PA
Asia Ltd. and supported by the ADB. Coordinating Minister for the
Economy Aburizal Bakrie, Minister of Finance Jusuf Anwar and
State Minister for National Development Planning Sri Mulyani
Indrawati also attended.

Local industry was represented by Indonesian Chamber of
Commerce and Industry (Kadin) chairman Mohamad S. Hidayat,
Kadin's China Committee (KIKT) chairman Kiki Barki and business
figures such as Arifin Panigoro and Tomy Winata.