(Reuters) – 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.
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% 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 Southeast Asia.
The companies did not disclose the financial terms of the deal. Nikkei previously reported that the fund is valued at $60 million.
Indonesia plans to launch a second sovereign wealth fund named Danantara Indonesia on February 24, which aims to manage assets exceeding $900 billion.
The country has emerged as a crucial market for several Japanese financial institutions in Southeast Asia, including DBJ, to expand their businesses in the country.
(Reporting by Sherin Sunny in Bengaluru; Editing by Tasim Zahid)
