Lippo Karawaci is currently undertaking the multi-billion-dollar Meikarta megaproject that will see the creation of a new satellite city on the eastern outskirts of Jakarta. (Photo courtesy of Meikarta)

Lippo Karawaci Plans to Raise $147m to Fund Growth Plans


SEPTEMBER 18, 2018

Jakarta. Indonesian property developer Lippo Karawaci plans to raise S$202 million ($147 million) by divesting its assets in two Singapore-based affiliates to strengthen its capital and fuel future growth.

In a filing to the Indonesia Stock Exchange (IDX) on Tuesday (18/09), the company said it has entered into a conditional share purchase agreement that will see OUE, a diversified real estate owner, developer and operator with assets in Asia and the United States, take over 60 percent of Bowsprit Capital, the manager and 7-percent owner of First REIT, a Singaporean health care real estate investment trust.

OUE Lippo Healthcare, an investment company that manages health care facilities in Japan, Malaysia and China, will take over the remainder of Bowsprit. The total value of the transaction will amount to about S$99 million.

Under the conditional share purchase agreement, OUE Healthcare Investment will also buy 83.6 million shares in First REIT from Bridgewater International, another Lippo Karawaci subsidiary, for S$102 million.

The transaction, which is expected to be wrapped up by end of November this year, will reduce Lippo Karawaci's shareholding in First REIT to 10.6 percent from 28.2 percent currently.

"We are delighted to announce this asset divestment plan has been carried out in timely manner, thereby improving LPKR's liquidity substantially," Lippo Karawaci president director Ketut Budi Wijaya said in a separate statement on Tuesday, referring to the company by its ticker symbol.

He added that the S$202 million would ultimately strengthen Lippo Karawaci's balance sheet and further enhance its cashflow.

"I am pleased that the funds will provide LPKR financial capability to deliver its commitment to the stakeholders, in serving our mutual best interest to continue our vision to be one of the most prominent township developers in Indonesia," he said.

Lippo Karawaci is Indonesia's biggest property company by total assets and revenue. Its businesses comprise residential and township developments, retail malls, hospitals, hotels and asset management.

The company is currently undertaking the multi-billion-dollar Meikarta megaproject that will see the creation of a new satellite city on the eastern outskirts of Jakarta.

Lippo Karawaci has established and sponsored two publicly listed REITs in Singapore: First REIT and the Lippo Malls Indonesia Retail Trust (LMIR Trust).

Singapore-based OUE is the sponsor of the OUE Hospitality Trust and OUE Commercial Real Estate Investment Trust, which were established to invest in income-producing hospitality businesses and hospitality-related real estate, as well as commercial assets in financial and business hubs.

OUE Lippo Healthcare, previously known as International Healthway Corporation, has announced its intention to expand its health care portfolio across Asia.

Lippo-affiliated OUE and OUE Lippo Healthcare both seek to capitalize on growing demand for affordable, quality health care.

In separate statement, OUE Lippo Healthcare said it will raise S$150 million through a rights issue, pending shareholder approval, to fund the acquisition. OUE and Japanese trading firm Itochu Corporation, which own 64.35 percent and 25.32 percent of OUE Lippo Healthcare, respectively, have committed to the rights issue, the company said in the statement.

"[OUE Lippo Healthcare's] existing investments in health care subsectors are well-aligned with the emerging industry trends, particularly, the increasing need for elderly care in Japan, which is driven by a rapidly aging population, as well as the increasing demand for quality medical services in China due to rising affluence and urbanization. The group seeks to expand its portfolio across China, Japan and Southeast Asia," Lippo Karawaci said in the statement.

The Jakarta Globe is affiliated with the Lippo Group.