Danantara to step up Middle East, energy security investments

[JAKARTA] Indonesian sovereign wealth fund Danantara plans to double down on investments in the Middle East in spite of the war in Iran, and also plans to allocate more money this year to energy security, chief investment officer Pandu Sjahrir said on Wednesday (Apr 15).

“We will continue to invest in the Middle East, especially in Mecca – because really, it’s amazing they’ve opened up Saudi for us to invest in,” he said in an interview with Bloomberg TV on the sidelines of a conference in Hong Kong.

“We are doubling down that effort. Because I think in the long term, Mecca will always be Mecca, it will always be a very good investment.”

Danantara, which has billed itself as the world’s seventh-largest sovereign fund by total assets, last year bought land and a hotel in the Saudi Arabian city.

The purchase was one of its first overseas investments. The fund has also injected capital into Indonesian state-owned enterprises and appointed other asset managers to make some investments on its behalf.

The year-old fund intends to deploy some US$14 billion in 2026 across various asset classes, according to Pandu.

“Given what is going on today, there’s probably going to be a bias towards energy security,” he said, adding that more energy is also needed to support the growth in artificial intelligence and digital infrastructure. There will also “be a bias towards critical minerals,” he said.

He said the ongoing Mideast conflict is likely to have long-lasting effects. “The impact, even if we finish the war this week or next week, you will still feel it for the next nine or 12 months,” he said.

Pandu also gave an update on Danantara’s partnerships with other sovereign wealth funds.

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He said the Indonesian fund is working with China Investment Corp “to bring partnership capital to invest in general partners, fund managers” that could in turn benefit Indonesia. “We are committing half a billion each of capital,” he said.

Danantara also has similar deals with the Qatar Investment Authority on real estate in Indonesia, Pandu said.

Last June, the Indonesian fund said it would work with Russia’s Direct Investment Fund to launch a joint investment platform and promote economic cooperation between the two countries, but little has materialised so far.

Indonesia’s President Prabowo Subianto recently visited Moscow and discussed economic matters and energy security issues with Russian President Vladimir Putin.

“With this new world order too, I think it also changes the dynamic with Russia,” Pandu said, adding that there are “things to follow up” on and “we just need more deals to happen.” BLOOMBERG