Abraaj Capital, the Middle East’s biggest private equity firm, plans to invest part of a $2bn fund in Southeast Asian natural resources to meet rising regional demand for coal, metals and agricultural products.
Copper and tin mines in Indonesia, as well as ancillary services tied to mining or agriculture, are of interest to Dubai-based Abraaj, Aman Lakhaney, a principal at Abraaj Capital Asia Pte, said in an interview in Singapore. Agriculture-related investments will be focused primarily in Vietnam and Malaysia, he said.
Abraaj would follow funds including Nathaniel Rothschild’s Bumi into Indonesia, Southeast Asia’s largest economy. The country supplies energy-assets and commodities to Asia’s fastest-growing economies including China, where companies have announced or completed $64.1bn in natural resource takeovers this year, according to data compiled by Bloomberg.
“Indonesia, given its size, growth and the history of deals in the resources and mining sectors, is obviously the most important market for us in the region,” said Lakhaney.
Abraaj also plans to buy minority stakes in education, health care, logistics, financial, manufacturing and retail companies in Southeast Asia and India, said Lakhaney. Abraaj set up its Singapore office in January and began standalone operations in India in March.
The firm had been operating in India since 2006 through a joint venture with Sabre Capital Worldwide Inc. and owns stakes in three infrastructure companies and an art dealer in the country, according to Abraaj’s website.
Indonesia is the largest exporter of power-station coal with proven coal reserves of 5,529 million tonnes at the end of last year, according to BP’s Statistical Review of World Energy report issued in June.
“Indonesia has been blessed with an abundance of natural resources and a great logistical advantage,” Pankaj Bhasin, managing director of Singapore-based Kitty Hawk Pte, a company that has invested $4m in Indonesia’s coal sector, said in an e-mailed response to questions on October 12. “The nation is strategically located to supply resources to hungry giants - India and China - and also to supplement requirements of other large Asian players.”
Mergers and acquisitions transactions involving oil & gas drilling, oil exploration, metals mining, iron and steel, and coal companies in China have totaled 355 deals this year, compared with 473 deals for all of last year valued at $82.6bn, according to Bloomberg data.
Abraaj, which has about $6.2bn in assets under management, has four employees in the region including Singapore-based Omar Lodhi, who is responsible for Abraaj’s investments in Southeast Asia and India. It intends to have eight analysts and fund managers each in the Singapore and India offices, Lakhaney said, without providing a timeframe.
The firm has been an investor in the Middle East, North Africa and Pakistan since early in the last decade, according to its website. It is currently invested in 23 companies, including Sharjah-based Air Arabia and Pakistan’s Karachi Electric Supply Co. Expansion in Southeast Asia would also be used to help current holdings expand in the region, Lakhaney said.
Other existing investments include a stake in Karachi-based Byco Petroleum Pakistan Ltd, an oil refining and petroleum marketing company with a market value of 7.29 billion rupees ($84m), and Egypt’s Orascom Construction Industries, a construction and fertilizers company that has a market capitalisation of 47.3bn Egyptian pounds ($7.92bn).