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INA to buy into toll roads of debt-laden SOEs
Indonesia's sovereign wealth fund is looking to purchase toll roads from state-owned enterprises in a bid to reduce their alarming debt ratios of above 2.0 in quarter two of 2020.
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Vehicles move at a snail's pace along the Bogor-Jakarta toll road on June 8, 2020. The country's sovereign wealth fund is planning to buy up the toll roads of several state-owned enterprises that booked losses last year. (JP/PJ.Leo)
T
he Indonesia Investment Authority (INA), the country’s sovereign wealth fund (SWF), has vowed to rescue debt-stricken state-owned infrastructure developers by buying several toll roads.
INA chief executive officer Ridha Wirakusumah said the fund had its eyes on toll roads belonging to state-owned construction companies Waskita Karya, Hutama Karya, Wijaya Karya and Adhi Karya, as well as state-owned toll road operator Jasa Marga.
“So they, in turn, can either pay their debt, make their company more efficient or even build new toll roads,” Ridha said on June 10 at a webinar held by the Indonesian Banking Development Institute (LPPI).
He added that the INA, along with other SWFs, planned to establish an infrastructure investment platform with funds of up to Rp 54 trillion (US$3.75 billion) to purchase the toll roads.
Read also: Corporate bond default risk remains high this year
In his webinar presentation, Ridha said the country had built and operated more than 2,000 kilometers of toll roads to 2020. Around half of these were mostly debt financed, which had strained the developers’ margins.
Finance Ministry data shows that state-owned enterprises (SOEs) in the toll road sector all had debt-to-equity (D/E) ratios above 2.0, which means they have twice as much debt as equity, making them risky businesses.
