October 9, 2018 / 7:11 AM / 2 months ago

Indonesian firms to sign pacts on $13.6 bln of infrastructure projects

NUSA DUA, Indonesia, Oct 9 (Reuters) - Indonesian state-owned companies this week will sign deals pushing ahead about $13.6 billion in planned infrastructure projects as the country seeks to diversify funding sources, authorities and a brokerage house executive said on Tuesday.

There will be over 20 deals signed by more than 12 state companies, including one by energy firm Pertamina and Taiwan’s CPC Corporation for a joint petrochemical business worth $6.5 billion, Rini Soemarno, a minister overseeing Indonesian state-owned enterprises told reporters in Bali.

Indonesia is hosting an infrastructure forum to coincide with the annual meetings of the International Monetary Fund and the World Bank in Bali this week.

Silvano Rumantir, chief executive of Mandiri Sekuritas, said most of the agreements due to be signed on Thursday are for strategic partnerships.

The Jakarta securities firm and its parent company, Bank Mandiri, have helped arrange some of the agreements.

Soemarno said that partnerships like some of those to be signed can “reduce our leverage position so we can deleverage and get more equity based financing”.

State companies have taken the lion’s share in President Joko Widodo’s ambitious infrastructure push. International rating agencies have warned that this has pushed those firms to borrow extensively, causing their balance sheets to deteriorate.

Inability to expand borrow is making state firms come up with new financing instruments, helping to deepen Indonesia’s shallow capital market.

Toll road operator Jasa Marga pioneered asset securitisation last year by offering a share in its future revenue. Construction firm Pembangunan Perumahan raised funds through the sale of the country’s first perpetual bonds this year.

In 2017, Jasa Marga also sold the rupiah-denominated offshore bonds, dubbed “Komodo bonds”.

On Thursday, Mandiri will launch an infrastructure investment fund, a mutual fund instrument combining debt and equity assets that’s offered to the public and aimed at helping finance infrastructure projects, Rumantir said.

He said the proceeds of the fund, the rupiah equivalent of around $100 million, will be used by Jasa Marga.

“We are hoping capital market investors like Black Rock, Allianz, AIA, would consider to take part,” Rumantir said.

Other agreements expected to be signed Thursday involve mining, airport expansion, tourism and transportation. (Reporting by Gayatri Suroyo and Fransiska Nangoy; Editing by Richard Borsuk)

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