Investments in Indonesia A New Hybrid Fund for Medium-Sized Businesses

The Indonesia Investment Authority (INA), in collaboration with the Development Bank of Japan (DBJ), has launched a hybrid fund aimed at financing medium-sized businesses in Indonesia. This initiative marks a significant step forward as hybrid financial solutions gain traction across the Asia-Pacific region.

Key Features of the Fund

The fund is designed to provide long-term secured investments tailored to meet the specific needs of medium- and upper-tier corporate clients. Its primary objective is to support sustainable business scaling by offering customized financing solutions, as highlighted in the joint statement released by INA and DBJ on Monday.

Growing Popularity of Hybrid Financing Solutions

Hybrid financing, which combines debt and equity capital, is increasingly emerging as an alternative to traditional funding tools. This approach is particularly appealing in fast-growing markets across the Asia-Pacific. By offering flexibility in meeting capital needs, hybrid solutions empower businesses to pursue expansion and innovation.

Strategic Goals

• Fostering Growth in Medium-Sized Enterprises. The fund focuses on enhancing the development of medium-sized businesses in Indonesia by providing financing solutions customized to their operational and financial requirements.
• Boosting Economic Growth Targets. Indonesia’s President Prabowo Subianto has set ambitious economic growth goals, aiming to raise the annual growth rate from the current 5% to 8% by 2029. Investments in medium-sized businesses will play a pivotal role in achieving this target.

Contributions of INA and DBJ

The Indonesia Investment Authority brings in-depth local market expertise and proficiency in structured financing. Meanwhile, the Development Bank of Japan contributes a wealth of experience in international finance and investment, along with strong business networks in Japan, facilitating private capital inflows to Southeast Asia’s largest economy.

Key Components of the Partnership

• Local Market Expertise. INA’s extensive understanding of Indonesia’s market landscape enables the fund to address specific business scenarios and challenges.
• International Networks. DBJ leverages its global connections to attract partnerships and unlock new investment opportunities that can further stimulate growth in Indonesia.

Advantages of the Hybrid Fund

The INA and DBJ hybrid fund represents a forward-thinking approach to secured investments, tailored specifically for medium-sized enterprises. By addressing their unique financing needs, the fund positions itself as a catalyst for broader economic progress in Indonesia, aligning with the country’s goals of fostering sustainable development and increased economic growth.

Exchange-Traded Companies Mentioned

Although INA itself is a sovereign wealth fund and not publicly traded, companies it partners with may include publicly traded entities. The Development Bank of Japan (DBJ) is a government-owned bank and not listed on any exchange.