07/09/2012 (Financial Times) - Singapore’s sovereign wealth fund and investment firm Northstar have made a $200m investment in an Indonesian oil producer, in one of the south-east Asia’s largest private equity deals of the year, said people familiar with the matter.

The purchase of a large minority stake in PT Triputra Agro Persada comes as investment sentiment is starting to turn negative on Indonesia as the commodities boom of recent years, driven by soaring demand from China, softens.

As a result, Indonesia's current account deficit has widened and the rupiah has weakened.

Although the price of palm oil has fallen from its peak, demand for cooking oils is higher than in the past, in part because some supplies are now flowing to the biofuels industry. Analysts also believe that palm oil is relatively resilient to recession because it is cheaper than other cooking oils.

While there was no formal auction for the Triputra Agro Persada stake, other private equity groups including KKR also submitted bids. Although a number of investment companies are building their Indonesian teams, including Blackstone, Carlyle and KKR, deals have remained elusive. Carlyle has tried for more than a decade to complete an investment in the country but has never succeeded.

The sale of the stake also underscores the extent to which Indonesia remains an insider’s market, with family networks making it tough for foreign investors to penetrate.

Triputra Agro Persada is owned by Theodore Rachmat, former chief executive of Astra International, the country’s dominant car company, and Benny Subianto, who was chief executive at Astra’s plantation arm at the time.

Both men went on to play a leading role in the build-up of PT Adaro Coal, which has become Indonesia’s largest coal company by market value.

GIC, the Singaporean sovereign wealth fund investing in Triputra Agro Persada, was an early investor in Adaro and has close relations with both executives.

In addition, Mr Rachmat is the father in law of Patrick Waluja, one of the founders of Northstar.

In acquiring part of Triputra Agro Persada, GIC and Northstar are taking a stake in a young company with growth potential.

It has 130,000 hectares of planted plantations in Kalimantan and Java, with a land bank of more than twice as much.

The investment consists of equity and convertible bonds and gives GIC and Northstar the right to invest an additional $50m. Northstar, with $1.2bn under management, is an associate of TPG.

TPG, which did not directly participate in the deal, is best known for its investment in BTPN, a local bank.