Indonesia Is Close to Naming Chief for $100 Billion Wealth Fund
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Indonesia has narrowed down the list of candidates to lead its new wealth fund to a handful, including Pandu Sjahrir of Indies Capital Partners Pte, according to people familiar with the matter.
The government is expected to decide this month on a chief for the fund, known as the Indonesia Investment Authority, said the people, asking not to be named because the matter is private. The 41-year-old Sjahrir, managing partner at the Indonesia-focused alternative asset manager Indies Capital, is considered a front-runner among the remaining candidates, though no final decision has been made, the people said.
Others on the shortlist include Arief Budiman, former finance director of energy producer PT Pertamina; Arsjad Rasjid, president director of PT Indika Energy; Tigor Siahaan, chief executive officer of PT Bank CIMB Niaga; and Rizal Gozali, president director of PT Credit Suisse Sekuritas Indonesia, said the people.
President Joko Widodo has envisioned the wealth fund as a $100 billion effort to boost the fortunes of the world’s fourth most-populous nation and counter the economic impact of the coronavirus. The investment authority will play a key role in financing big-ticket projects from infrastructure and healthcare to tourism and technology. It will solicit local and global investors to participate in sub-funds for particular projects.
The finance ministry declined to comment, while the candidates under consideration didn’t immediately respond to requests for comment.
The government plans to kickstart the fund early this year with $5 billion in assets and will seek about $16 billion in investments initially. Cyril Noerhadi, chairman of Creador Capital Group Indonesia, was appointed as one of the members of the fund’s independent supervisory board, alongside Yozua Makes and Haryanto Sahari,according to a parliamentary press statement on Wednesday.
Unlike many sovereign wealth funds set up by wealthy countries like Norway and Singapore to manage their vast oil revenue or foreign reserves, the Indonesian model is designed to attract foreign capital as co-investors.
The Indonesia Investment Authority has already gained billions of dollars in pledges from the U.S. and Japan ahead of its operational start this year. Japan committed $4 billion through its Japan Bank for International Cooperation, double the amount pledged by the U.S. International Development Finance Corporation, Luhut Pandjaitan, Indonesia’s minister of maritime and investment affairs, has said.
Diego Lopez, managing director at data provider Global SWF, said similar models have been rolled out from Russia, Italy and France to India’s National Investment and Infrastructure Fund. But for Indonesia to succeed in attracting foreign capital, a strong formal structure, governance and leadership will be crucial in light of the 1MDB scandal in neighboring Malaysia.
“Infrastructure is long term and a safe stream of cash flows so it ties in very well with the appetite of sovereign wealth funds, and emerging Asia is a big theme for sovereigns,” he said, adding that Indonesia’s demographics made it attractive. “But sovereigns have very strict investment committees and they challenge every single opportunity that they need to invest and commit into.”
Lopez said any CEO coming into the new role would have to be someone who is able to work with the government, while also commanding the respect of the investment world.
Read more: Indonesia Said to Plan to Set $100 Billion Wealth Fund Goal
Sjahrir is a prominent investor and a well known name in Indonesia’s tech industry. After getting degrees from the University of Chicago and Stanford University Graduate School of Business, he became an early investor in local startups such as Gojek. In addition to Indies Capital, Sjahrir serves as chairman of Sea Ltd.’s operations in Indonesia and a board member of the Indonesia Stock Exchange.
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