The Indonesia Investment Authority, Jakarta, and Manulife Investment Management entered a partnership to raise funds for investments in Indonesian real assets, the firms said in an exclusive interview.
The partnership involves co-investments between the sovereign wealth fund, Manulife IM and third-party investors into Indonesian infrastructure, real estate and the natural capital sectors, which include timberland and agriculture assets.
The Indonesia Investment Authority is a relatively new sovereign wealth fund, set up in 2021 to drive investments into Indonesia. It now manages around $9.5 billion in assets.
Neither firm has set a target or commitment for the investments, and the structure of the investment will likely be onshore vehicles that will house capital from Manulife IM, INA, and a "larger portion from third-party clients or prospects," said Peter Kim, Hong Kong-based senior managing director and head of institutional business of Asia-Pacific (ex-Japan) at Manulife Investment Management.
Manulife IM's conversations with prospective clients started around five to six months ago, and they range from early to late-stage discussions. But interest has been strong, Kim said.
"We're seeing a significant amount of capital from investors regionally that are further investing or looking to invest into Southeast Asia; Indonesia, obviously being a key market in Southeast Asia, in particular when you consider the demographics of Indonesia — a very large and relatively young population," he said.
The investments will focus on logistics and digital infrastructure such as data centers, to support the high adoption of technology particularly in e-commerce and artificial intelligence, said Kenny Lam, Hong Kong-based chief investment officer and head of transaction for Asia-Pacific real estate at Manulife IM.
Eventually, the partnership could explore opportunities in the natural capital space such as timber and agriculture. "We are a leading investor in the natural capital space globally. Timber and agriculture have been the two main assets we currently manage, and we've been managing them for over three decades," Kim said.
Manulife Investment Management had $773 billion in assets under management on behalf of clients as of June 30, of which $3.1 billion is in Asia real estate assets and $15 billion is invested in timberland and agriculture.
The Indonesia Investment Authority has signed numerous agreements with global institutional investors to invest in Indonesian assets.
For instance, on Jan. 24, Dutch pension investor APG Asset Management, Heerlen, which had €517 billion ($547.1 billion) in assets as of Sept. 30, and a subsidiary of the Abu Dhabi Investment Authority, with an estimated $993 billion in assets, announced that they have invested alongside INA in toll roads in Indonesia.
The sovereign wealth fund has deployed $3 billion so far, primarily in private equity and infrastructure. Before the agreement with Manulife IM, it committed or invested approximately $1.5 billion into the transportation, logistics and data center sectors, said Arief Budiman, deputy CEO of INA. The fund hopes to leverage the partnership to increase investments in those areas, he added.
"Logistics is very important right now. Our first endeavor would be focusing around modern warehousing. So, right now, Indonesia has roughly 30 million square meters of warehouses of which less than 10% is modern warehouses. And this is where we expect to actually invest and help develop the country's logistics (sector) while obviously creating value," Budiman said.
The fundraising will focus on institutional investors for now but Budiman hopes there will eventually be a product for retail investors to invest in Indonesian infrastructure, he said.
