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Canadian pension funds to invest in Cipali toll road
Canada Pension Plan Investment Board (CPPIB) is looking to buy a 45 percent stake in West Java's Cipali toll road, while Baskhara Utama Sedaya (BUS), a wholly-owned subsidiary of PT Astra Tol Nusantara, looks to increase its ownership in the toll road to hold the remaining 55 percent.
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Vehicles queue at the entrance to the Cikopo - Palimanan (Cipali) toll road in Cirebon, West Java, ahead of Idul Fitri on June 5. (Antara/Dedhez Anggara)
C
anada Pension Plan Investment Board (CPPIB) will make its first infrastructure investment in Indonesia with the acquisition of a 45 percent stake in PT Lintas Marga Sedaya (LMS), the concession holder and operator of the Cikopo-Palimanan (Cipali) toll road in West Java.
The investment will be made in partnership with PT Baskhara Utama Sedaya (BUS), a wholly-owned subsidiary of PT Astra Tol Nusantara (Astra Infra), CPPIB stated in a press release issued on Thursday.
CPPIB and BUS will jointly acquire the 55 percent stake currently held by PLUS Expressways International Berhad, a subsidiary of the UEM Group, ultimately wholly-owned by Khazanah Nasional Berhad. BUS currently owns 45 percent of LMS and will increase its stake to 55 percent. CPPIB will acquire the remaining 45 percent in LMS.
The company did not disclose the price for the 45 percent stake in LMS.
“We are pleased to invest in the Cipali toll road alongside Astra Infra, a knowledgeable and sophisticated local partner, and look forward to a successful long-term relationship between our two organizations,” said Scott Lawrence, managing director and head of infrastructure at CPPIB.
He added that the toll road afforded CPPIB access to a vital infrastructure development supported by rising motorization rates in one of the most densely populated and economically productive regions of Indonesia.
At a length of 117-kilometers, the Cipali toll road is one of the longest operational toll roads in Indonesia and a critical link in the transportation network of the island of Java, as part of the trans-Java toll road network. It serves as a thoroughfare within West Java, which is Java’s most populous and fastest growing province, and it connects West Java and suburbs of Jakarta with the rest of Java.
“As CPPIB’s first infrastructure investment in Indonesia, this deepens the fund’s commitment to the Asia-Pacific region as well as our focus on investment in new markets with attractive return and risk characteristics,” said Suyi Kim, senior managing director and head of Asia Pacific at CPPIB.
The transaction is expected to be completed in the fourth quarter of 2019, subject to customary closing conditions, including regulatory approval.
CPPIB has a diversified, global portfolio of infrastructure assets and makes direct investments through many of its nine offices worldwide. It invests the funds not needed by the Canada Pension Plan (CPP) to pay current benefits. CPPIB’s Infrastructure group is focused on investing in quality, large-scale core opportunities with dependable, like-minded partners. As of June 30, CPPIB had C$33.1 billion (US$24.96 billion) invested in infrastructure assets globally.
