PT Danareksa to establish venture capital
JAKARTA (JP): State-owned PT Danareksa, in cooperation with four foreign financial and investment companies, plans to establish a venture capital firm, PT Danareksa-Daiwa/NIF Ventures.
Danareksa President Glenn Yusuf said the venture firm will provide capital assistance, in the form of equity participation, to medium-sized firms wanting to go public.
"We will help companies which are not yet ready to go public to go public," Glen told journalists before signing the memorandum of understanding with its five foreign partners.
The foreign partners include Nippon Investment and Finance Co. Ltd of Japan, Daiwa Securities Asia Holding B.V. of the Netherlands, Mithras Ltd. of Brunei and Central Investment Holding Co. Ltd. of Taiwan.
Kazuyuki Hiraki of Nippon Investment, who will be the president of the venture capital firm, said that the new company will have paid-up capital of Rp 30 billion (US$12.7 million) and start operations in November.
He added that the company will raise some US$50 million from overseas financial sources, including some in Cayman Islands, to finance its venture projects.
Edgar E. Sujanto, president of PT Danareksa Finance -- a subsidiary of Danareksa -- said that the venture will invest its funds in companies, in the form of capital participation, within a three to five-year period.
"We will maintain our capital participation in each company for three to five years before selling it to other parties or the public when the companies go public," Edgar said.
He explained that the venture's income will come from either dividends of its equity participation in other companies or the value differentials of the shares.
He said Danareksa's entrance into the venture capital business is to help encourage the development of the local venture capital market, which he said is still in its initial stages of development.
"We have to encourage the development of more venture capital firms because they can provide companies with an alternative financing source other than bank loans," Edgar said.
He said that besides providing an equity, the new venture capital will also provide management assistance to companies which need it.
"Our main objective is to make companies better. So, when they need help other than equity participation, we will provide it," Edgar said.
PT Danareksa-Daiwa/NIF Ventures, 30 percent owned by Mithras, 25 percent by Danareksa, 20 percent by Nippon Investment, 20 percent by Daiwa Securities and 5 percent by Central Investment, is the country's first venture capital involving foreign firms.
Indonesia currently has some 20 venture capitals, whose establishment is sponsored by state-owned PT Bahana Artha Ventura. The company injected Rp 1 billion as an equity participation into each venture capital firm. (rid)