Mandiri to issue infrastructure funds

A major investment manager in Indonesia, Mandiri Investasi, plans to issue infrastructure funds to take advantage of the growing infrastructure business following the approval of the Land Acquisition Law by the House of Representatives (DPR) recently.

Mandiri Investasi president director Abiprayadi Riyanto said in Jakarta on Tuesday that the funds would be issued in the form of private equity funds that would be invested in infrastructure projects worth between Rp 400 billion (US$44 million) and Rp 500 billion.

“We are in negotiation for two to three infrastructure projects. One or two projects are related to power plants and the other to road construction. We are also viewing projects such as clean water supply,” Abiprayadi said at a press conference of Mandiri Sekuritas Economic Forum on Tuesday.

Mandiri Investasi expects the private equity funds to be launched this year.

According to the Capital Market and Financial Institution Supervisory Agency (Bapepam-LK), private equity funds are mutual funds specifically offered on a limited basis to professional investors. The funds’ net asset value are to be reported every three months.

Abiprayadi said that several investors, including pension fund companies, had expressed interest in Mandiri Investasi’s private equity funds on infrastructure projects.

He said investors were starting to look for new mutual funds that gave high returns amid lower interest rates. The central bank recently cut 25 basis points off its benchmark interest rate to 5.75 percent.

“Pension funds, for example, have certain targets of interest rates for their customers. The companies have to look for investment tools with high returns, including government infrastructure projects, which is seen as being more secure and give higher yields,” Abiprayadi said.

Mandiri Sekuritas president director Harry Supoyo said the infrastructure sector still had room for major development to support sustainable economic growth. Infrastructure has become a major problem in the archipelagic country.

“Investors have priorities. They have to look for attractive projects, which give commercial returns. Infrastructure projects are now very attractive,” he said.

The high expectation on infrastructure projects is supported by the enactment of the law on land acquisition. The law is expected to ease acquisition of land, which has been a problem in the development of infrastructure, especially for public facilities.

Moreover, the country’s sovereign debt rating was recently raised to investment grade by Fitch Ratings and Moody’s Investor Service. The upgraded rating means investors should be less worried about investing in Indonesia.

“Indonesia has to use the momentum to make its economy better by realizing infrastructure development quickly. We will take part by issuing mutual funds related to infrastructure projects,” Abiprayadi said.

Mandiri Investasi’s assets under management (AUM) reached Rp 21.4 trillion in 2011. The company’s year-to-date AUM stands at Rp 22.2 trillion. The company is aiming to book Rp 25 trillion in AUM by year-end.