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Indonesian pension makes first direct infra deal

The $261m toll road transaction comes shortly after the government announced a scheme enabling pension money to fund domestic projects.

Indonesia’s second-largest state-run pension fund, Dana Tabungan Dan Asuransi Pegawai Negeri, also known as Taspen, has teamed up with state-owned infrastructure financier Sarana Multi Infrastruktur to acquire 29 percent of Waskita Toll Road, a subsidiary of state-owned construction firm Waskita Karya Tbk. 

The 3.5 trillion-rupiah ($261.4 million; €245 million) transaction, which reached financial close last week, saw Taspen disburse 2 trillion rupiahs, with SMI contributing the balance. This is the first direct infrastructure investment by the 160 trillion-rupiah Indonesian pension, according to Ipop Nawangsari, a partner at Oentoeng Suria & Partners, legal advisor to the two investors on the deal. 

The transaction is also the pilot project of the Non-State Budget Investment Financing for Infrastructure programme (PINA), proposed by the Indonesian government late last year to channel long-term capital, including pension money, into public projects. 

Before PINA's introduction, all infrastructure projects in the country were funded by the government through state-owned enterprises, Nawangsari said. Delays often occurred due to the lengthy discussions needed to approve state funding for the projects. The scheme thus aims to provide an alternative funding channel for infrastructure development in the country. 

The investment will help Waskita continue its work on developing over 14 toll road projects with a total length of 750km. The pipeline includes several projects that are part of the trans-Java toll road network, which links the capital to Surabaya. 

Set for completion in 2018-2019, the trans-Java toll road project will also be the first financed by pension funds, according to the law firm. Further equity injections into Waskita Toll Road may be made in the future, the law firm added.