L

ippo Group’s Multipolar announced plans for a US$75 million expansion this year amid an assessment on whether to maintain its Matahari Putra Prima subsidiary after global retail giants showed interest in Matahari’s Hypermart arm.

Chief financial officer Reynold Pena Ong said Monday the funds would be used mainly to open new department stores in China and expand Hypermart in Indonesia.

“We’re keeping our doors open [to investors’ interests in Hypermart], but we still go about business as usual, either on our own or with a partner. But the point is we’re confident that we can expand this year,” he said at a press briefing in Jakarta.

Multipolar plans to open six to seven department stores in China with an investment of between $60 and $70 million and would spend “another $12 to $15 million in Indonesia”, Reynold said, citing plans to open 17 new Hypermart stores.

The firm’s total investment would be about $75 million this year from internal cash and bank loans, he added.

“China’s purchasing power and per capita income is growing so it’s become one of our investment destinations to expand our business,” Reynold said, on the day it was reported that China had officially surpassed Japan as the world’s second-largest economy.

Despite plans to expand in China, Hypermart “remained Multipolar’s core business”, he added.

Several retail giants, including South Korea’s Lotte Shopping Co., have expressed interest in acquiring Hypermart through international financial advisor Merrill Lynch, which was appointed by Matahari.

Matahari, however, turned down the offer, citing Merrill Lynch’s suggestion that shareholders retain control over Hypermart.

“However, Matahari welcomes interest from global retailers to become strategic investors to jointly expand Hypermart,” Danny Kojongian, Matahari’s director of corporate communications, told The Jakarta Post last month, adding that investors would have to discuss plans with Multipolar as shareholders of the firm.

Multipolar managing director Harijono Suwarno said that as of Jan. 14, Merrill Lynch had also been evaluating his firm’s finances and meeting with potential investors to determine whether Multipolar would sell its stake in Matahari to grow Hypermart. “We are continuing discussions with Merrill Lynch. They’re our financial advisor so they should come up with something that fits [Multipolar’s] structure,” Harijono said, adding that he expected the assessment to be completed soon, but did not offer a time frame.

“There are several parties who have shown interest [in Matahari for its Hypermart business]. But whether Matahari will be sold depends on Merril Lynch’s assessment. We’re also looking at other forms of cooperation,” he added.

Harijono said investors that had been in talks with Merril Lynch “are from overseas and they are all serious” about investing in Matahari.

“If we could sell a small amount [of shares] at a bigger profit, we would do that,” Harijono said.

Multipolar on Monday announced consolidated 2010 net profits of Rp 2.8 trillion ($313.98 million), more than 25 times higher than Rp 110.7 billion a year earlier due to the divestment of its subsidiary, Matahari Department Store. Sales reached Rp 11.2 trillion last year mainly thanks to Hypermart.

—JP/ Esther Samboh