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TPG, GIC Invest in Delta Dunia, Bet on Indonesian Coal Industry

TPG Capital and Government of Singapore Investment Corp. have invested in PT Delta Dunia Makmur, which owns Indonesia’s second-biggest coal mining contractor, as they bet on growth for the resources industry.

David Bonderman’s TPG and GIC, which manages Singapore’s reserves, bought non-voting shares in Northstar Tambang Persada Ltd., an investment vehicle which owns 40 percent of Delta Dunia, according to a letter filed to the Indonesian stock exchange today.

TPG and GIC bought the shares from Indonesia’s Widjaya family, which owns Sinar Mas Group, and the previous owners of Delta Dunia, Ashish Shastry, TPG’s head for Southeast Asia, said in an interview today. TPG, GIC and Northstar Equity Partners, a Jakarta-based private-equity firm backed by TPG, are now the only shareholders in the vehicle, he said.

This is one of the biggest private equity investments in Indonesia, Shastry said, declining to disclose the value of the transaction. Northstar Tambang Persada’s stake in Delta Dunia is worth about $400 million, based on the current market value of the company.

Indonesia overtook Australia to become the world’s biggest exporter of power-station coal in 2005, and prices for the fuel, set annually, rose 40 percent this year, according to Morgan Stanley. Indonesia’s coal industry is set to “grow substantially” in the coming years to meet demand from China and India, the world’s fastest-growing major economies, he said.

‘Big Believers’

“We are big believers in the Indonesian coal sector,” Shastry said. “Indonesian coal is globally the most cost-competitive coal for India and China.”

Jakarta-based Delta Dunia wholly owns PT Bukit Makmur Mandiri Utama, or Buma, Indonesia’s second-largest coal-mining contractor.

“Buma is less susceptible to coal prices going up and down; they are really a volume player,” Shastry said.

GIC is also invested in coal producer PT Adaro Indonesia.

Northstar Equity Partners will continue to retain voting rights and a controlling interest in the investment vehicle, according to the letter. Northstar will also still own a stake in the non-voting shares, Jakarta-based Patrick Walujo, co-founder of the Indonesian private-equity firm, said in the same interview in Singapore.

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