Friday, September 12, 2008

Private Equity Comes To Indonesia

There’s rich, there's very rich, and then there are people like Henry Kravis. The investing king of Kohlberg Kravis & Roberts (KKR), along with compadres like Blackstone Group’s Steve Schwarzman, have made gazillions of dollars and thrown themselves memorable birthday parties thanks to the wonders of private equity.

No wonder others want a piece of the action. Now the former head of JP Morgan’s Indonesia business, Gita Wirjawan, is setting up an Indonesia-focused private-equity fund. He’s already raised $300 million to invest in infrastructure and natural resources, courtesy mainly of Muslim investors in the Middle East, Malaysia and Brunei. Teaming with him is Ivor Orchard, a former JP Morgan energy banker.

In macro terms, it’s a solid strategy to be scouting for opportunities in an overlooked market. But the timing is, shall we say, iffy. First, even Schwarzman (went public at the height of the market) and Kravis (going public now) are getting out of private equity, which should tell you something. And as for infrastructure and natural resources, name two other sectors that are going to be as hard-hit as the world economy skids to a halt.

Of course, that could mean they’re getting in at just the right time for bargains. Or it could mean they’re trying, as the proverb goes, to catch a falling knife …

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