Indonesia’s INA, Japan’s DBJ launch hybrid fund for mid-sized businesses

INDONESIA Investment Authority (INA), the country’s first sovereign wealth fund, and the Development Bank of Japan (DBJ) have launched a hybrid fund to provide financing for medium-sized businesses in Indonesia.

The fund will focus on senior secured investments, offering tailored financing solutions to mid and upper-market corporates while providing resources for businesses to scale in a sustainable manner, the two companies said in a joint statement on Monday (Feb 17).

Hybrid capital solutions, which use debt and equity to address the capital requirements of businesses, have been gaining momentum across the Asia-Pacific region as an alternative to traditional financing.

Indonesian President Prabowo Subianto has pledged to increase the country’s economic growth from its current rate of 5 to 8 per cent annually by 2029.

INA will leverage its local market understanding and structured financing capability, while DBJ will bring its finance and investment experience and Japan-related business networks to generate private sector investment in the largest economy in South-east Asia.

The companies did not disclose the financial terms of the deal. Nikkei previously reported that the fund is valued at US$60 million.

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Indonesia plans to launch a second sovereign wealth fund named Danantara Indonesia on Feb 24, which aims to manage assets exceeding US$900 billion.

The country has emerged as a crucial market for several Japanese financial institutions in South-east Asia, including DBJ, to expand their businesses in the country. REUTERS