Northstar acquires 40% stake in Indonesian mining contractor

TPG Capital’s Indonesia-based affiliate has taken a stake in Delta Dunia Makmur, which has simultaneously completed the acquisition of coal mining contractor Bukit Makmur Mandiri Utama.

Northstar Pacific Partners, an Indonesia-focused private equity firm, has acquired a 40 percent stake in Delta Dunia Makmur, a diversified company which acquired Bukit Makmur Mandiri Utama (BUMA), in a deal estimated to be worth between $350 million and $400 million.

In August, Delta Dunia said it had reached an agreement to acquire BUMA for $550 million. BUMA is one of Indonesia’s largest coal mining contractors. It was widely speculated in local media reports at the time that Northstar Pacific had a role in the acquisition of BUMA.

That acquisition has now been completed. Delta Duniya has simultaneously sold 2.6 billion shares or a 38.29 percent of its own share capital for about $386 million through an equity placement, it said in a statement. The company has also sold 2.72 billion shares or a 40 percent interest to Northstar Pacific, it said, without disclosing the amount the private equity firm paid for the stake.

One source told the Wall Street Journal Northstar Pacific paid the company 1,400 rupiah ($0.15; €0.10) per share, the same price the shares were sold for in the equity placement. If this is the case, the private equity firm would have paid $404 million for its 40 percent stake in the company.

According Finance Asia, Northstar paid $350 million for its stake. Northstar did not respond to a request for comment by press time.

Delta Dunia was initially a manufacturing company primarily engaged in the production of sweaters. The company’s other activities include trading, mining, land transportation and services. It has since changed its primary activity from garment manufacturing to property development. 

Northstar Pacific was founded in 2003 as a Jakarta-based merchant bank engaged in principal investments and oporate finance advisory services. The firm tied up with TPG Capital in 2006 to raise a private equity fund focused primarily on investments in Indonesia and selectively in other ASEAN markets. The firm has made investments in the oil and gas, mining, retail and consumer goods, telecommunications and banking sectors.