Investing in Inclusive Business in Indonesia: A Market Scoping Study

Preliminary Findings
October 16, 2012

Indonesias dual development goals are evolving

Pro-growth Pro-job Pro-poor

7% (2014) 6.5% (2012) 11% (2012)

+
Pro-green 26-41% (2020)
2

Outcome Document The Future We Want Pada penutupan KTT Rio+20, telah disahkan outcome document The Future We Want diadopsi pada akhir sesi Debat Umum pada tanggal 22 Juni 2012. Dokumen ini terdiri dari 283 paragraf yang intinya berisi:
Our common vision; Renewing political commitment; Green economy in the context of sustainable development and poverty eradication; Institutional framework for sustainable development; Framework for action and follow-up; Means of implementation.

AGENDA
1. What is IB and the purpose of our study? 2. Macro-economic context for IB in Indonesia 3. Inclusive Business Models in Indonesia 4. IB Investments 5. Recommendations for ADB Support 6. Questions and Answers

Assessment Process
Macroeconomic landscape, PE market, SE & IB market and donor landscape Data collection
methods Macroeconomic assessment Findings PE market assessment Relevance Study recommendations Investment Strategy Donor Mapping
30 fund manager and co-investor interviews 10 case studies being developed Secondary research on PE and capital markets in Indonesia Secondary research of macro and micro economic conditions in Indonesia

Inclusive Business Market

38 in-person company interviews so far Secondary research on landscape Specifically targeted companies operating in Eastern Indonesia

8 donor interviews completed Existing donor-funded initiatives analyzed

Forum held in Jakarta, Indonesia to gather inputs from diverse stakeholders and review progress so far 5

Inclusive Business Forum

What is inclusive business

Inclusive businesses maximize profits while delivering strong social impact: Helping Business to be more inclusive Helping Social enterprises to scale up and achieve market returns
Classification of business models
Above market returns

Business

Inclusive business

Market returns Social enterprise

Below market
1

Companies and enterprises that directly engage- in innovative ways - BoP populations in their value chain as consumers, suppliers, distributors or employees and create systemic impact in scale on poverty reduction and inclusiveness.

Low

Positive externalities
1

High

Improvement in human development indicators, Source; Dalberg analysis

Key Market Trends

Increasing Growth stimulated by national demand from the lower middle class (BoP)

Key Market Trends

Declining poverty, but a large number of BoP

% of Total Population

78.0% = 193.90 Ml
Total population living on US$3 per day

49.0% = 118.74 Ml near

poor Indonesians living around PPP US$2 per day

16.7% = 40.99 Ml living

below National Poverty Line (US$1.25 per day)

7.4% = 18.16 Ml Indonesians

in abject poverty living on less than US$1.00 per day
Source: Central Statistics Agency / Susenas (National Socio-Economic Survey) 2010

 and high underemployment

IB can help in involving the poor through value chain production
INFORMAL EMPLOYMENT BY REGION (AGES 15+ at %)
90

80

70

60

50

40

30

20

10

2001

2010

9 Source: BPS Quarterly Wage Statistics

AGENDA
1. What is IB and the purpose of our study? 1. Macro-economic context for IB in Indonesia 2. Inclusive Business Models in Indonesia 3. IB Investments 4. Recommendation for ADB Support

10

38 Companies with IBs selected based upon Size, Potential Growth and BoP engagement
Company Name Agriculture/Agribusiness 1 2 3 4 5 6 7 8 9 Usaha Kita Makmur Indonesia (UKMI) Paskomnas PT. Mars Symbioscience Indonesia PT. Great Giant Pinneaple Indonesia Green Gold Group Riau Sagu Lestari & Sinar Sagu Mas PT. Agri Spices Indonesia CV Indo Agro Perdana Javanegra Small Large Large Large Medium/Large Small/Mediun Medium/Large Small Medium High High High High High High Moderate High High Rice, Forest Honey etc. Agribusiness Wholesale Market Chocolate Producer Canned Pineapple Producer Seaweed Starch producer /processor Spice trader and processor Coffee Tourism Size Growth Prospect Sector Specific/Product BoP Engagement Model C D E S

Manufacturing/Light Manufacturing 10 11 12 13 14 15 16 17 18 Lautan Luas Tbk PT. Panasonic Manufacturing Indonesia PT. Holcim Indonesia PT. DUA Lighting PT. Aditec Cakarwiyasa Mandala Marmer Dian Handycraft Silverplas Pasific Nike Indonesia Large Large Large Small Large Small Small Small Medium/Large High High Moderate Average Average Average High High Chemical trader and processor Electronic/Home Applience Cement producer Lamp/lighting Manufacturing/Light Manufacturing Marble producer Handycraft Plastic pellet Sport apparel

Consumer Product/Retail

19
20 21

PT. Tirta Investama (Aqua Danone)

PT. Adiwara Worldwide Tudung Group

Large
Small Large

High
Average High

Bottled water
Health Product Food

38 Companies with IBs selected based upon Size, Potential Growth and BoP engagement
Potential Growth BoP Engagement Model C D E S

Company Name Consumer Product/Retail 22 23 24 25 PT. Sarinah PT. Unilever Indonesia Mustika Ratu Asa Food

Size

Sector Specific/Product

Large Large Large Medium

Moderate High High Average

Department Store/retailer Consumer good Herbal and cosmetic Bread producer /distributor

Renewable Energy 26 27 28 29 30 31 Medco Power Indonesia PT. Sintesa Banten Geothermal PT. Sinar Indonesia Merdeka Ecoport Power Persada Terrasys Energy RiverGen Large Medium/Large Medium/Large Medium/Large Small/Medium Small Moderate Moderate High Average Moderate Moderate Geothermal Geothermal Biomass/Biogass Energy Efficiency System Multi-source renewable energy Hydro Power

Tourism 32 33 Pulan Macan Village & Eco Resort Manuaba Mandiri Small Small High High Eco resort Eco resort and estate

34
35 36 37 38

Ecolodges Indonesia
idGuides Bakrie Telecom Tbk. PT. Riau Andalan Pulp and Paper Link Taxi

Small
Small Medium/Large Large Small

High
High Moderate Moderate Average

Tourism
Tourism Telecommunication Forestry Transportation

Others

Agriculture, Manufacturing, Consumer Product, Renewable Energy and Tourism are the most attractive sector with IB Model
Market Scope Financial Returns Systemic problem solving Social Returns Reach of the Poor Depth of poverty reduction Relevance Innovative ness of IB Model

Sector

Number of IB Companies

Profitability

Agriculture
Manufacturing/light manufacturing Consumer Product/Retail Renewable Energy Tourism Telecommunication Forestry Transportation Finance Health, Education Housing, Water

Very high
High Very high Medium Medium Low Low Low

Very High
Very High Very High High High Very High High Medium

High
High High High Medium Low Low High Interview in process Interview in process Interview in process

Very high
High Very high Very high Medium / High Low Low / Medium Medium / High

High
High Medium High Medium High Medium Low

Agriculture, consumer products, and retail.

High IB involvement - Agriculture/ Agribusiness - Handicraft/ Traditional products - Retail market & Tourism services Geographic target Direct correlation to infrastructure availability; High population centers

Renewable energy, IT, and basic services (i.e. housing, water, etc)
IBs that address systemic problems Renewable energy Supply chain constraints Nutrition and food products Geographical targets Rural/ isolated regions Rich natural resources

IB Model 1: BoP as part of the supplychain

Large scale producers relying on small farmers/ producers to supply to their plant/ factory Established system in-place: Inti-plasma or contract farming Scaleable and Replicable Involves most number of households

Model 2: Business addresses systemic problem for BoP

Infrastructure/ Health or Education related Innovative Small-scale Integrated Strong multiplier implication commodity/ location-based development of scalable methods and systems strong multiplier effect
14

AGENDA
1. What is IB and the purpose of our study? 1. Macro-economic context for IB in Indonesia 2. Inclusive Business Models in Indonesia 3. IB Investments 4. Recommendations for ADB Support

15

Capital Market Environment

There is a niche for inclusive business finance

Good Macroeconomic Environment for Investment

market liquidity, default loans, exchange reserves, inflation rate, debt ratio, JCI, GDP . PE sectors 2011 - coal mining, infrastructure, telecoms, plantations and banking 2010 FDI $14b; 2011 FDI $20b; 2012 $25b (est) Concentrated in mining & chemi/pharma $2b; utilities $600m; F&B $500m; MME $500m VC/PE market to expand with regional competition for regional and global investment Successful IPOs and multiple exits with minority positions in smaller deals

Challenges
Limited IB finance expertise, lack of investment-ready SMEs and angel networks Inept bureaucracy, endemic corruption and weak investor protection Regulated PE market environment and transition to Financial Services Authority Legal factors to recognize limited partnerships and collective investment frameworks

Opportunities
Engage IB market niche with regional IB fund Up-swelling in entrepreneurship ecosystems Mandated CSR with limited value proposition Low valuations and under-valued/managed assets

16

Capital Market Environment

Lots of money available, not reaching SMEs (due to collateral/business readiness)

Banking Sector Trends

NBFI Asset Growth (IRD trn)

SME Sources of Capital

17 Source: BI, Bloomberg, Nomura Research, BPS, Stan Chart Research, Bain & Co., IDX Factbook , WSJ, World Bank

16 Possible IB Fund Managers Analyzed (1)

Mix of regional/global IB-focused funds and national capital market funds
Fund Manager IB Focus
SMEs + IB interest

Geographic Focus
Emerging Markets Asia Regional & Special Funds Indonesia

Investment Stage

Investment Sector
Clean Energy, Hospitality, Financial Services, F&B, Transport, Education, Healthcare, Retail, Pharmaceutical/Bio- tech Financial Services, Real Estate, Hospital-ity, Clean Energy, IT, Natural Resources, Healthcare Transport & Logistics, IT

Aureos Capital

Growth

AXA Asset Management Bahana TWC Investment Management

No but IB interest No but IB interest

Listed Equities Fixed Income PE Growth Listed Equities Public Bonds Early/Growth Micro/Impact

Indonesia

Bamboo Finance

Yes

Emerging Markets Asia, Africa, C. America Indonesia

Clean Energy, Healthcare, Financial Services, Education, Water, Low Cost Housing, Agriculture Infrastructure, Mining, Transport & Log-istics, Energy. Interest in SME funds Financial Services, Energy, F&B, Transport & Logistics, Real Estate Financial Services, Clean Energy, Agriculture, Healthcare.

Batavia Investment Management Batavia Prosperindo Asset Management

No but IB interest No but IB interest

Growth Listed Equities Fixed income Early/Growth Micro/Impact

Indonesia

BlueOrchard

Yes

Emerging Markets Asia, Africa, S. America Indonesia

Brent Asset Management

No but IB interest

Listed Equities

Financial Services, Real Estate, F&B, Transport & Logistics, Manufacturing, Retail

18

16 Possible IB Fund Managers Analyzed (2)

Mix of regional/global IB-focused funds and national capital market funds
Fund Manager
Grassroots Business Fund

IB Focus
Yes

Geographic Focus
Emerging Markets Indonesia Emerging Markets Indonesia

Investment Stage

Investment Sector
Agriculture, Clean Energy, Healthcare, Education Agriculture, Clean Energy, IT, Health-care, Education

Early/Growth Micro/Impact

LGTPV

Yes

Early/Growth Micro/Impact
Listed Equities Fixed Income Public Funds Listed Equities Public Bonds Listed Equities Public Bonds Listed Equities Fixed Income Public Bonds PE Growth Listed Equities Public Bonds Listed Equities Public Bonds

Mandiri Manajemen Investasi Manulife Asset Management Milenium Danatama Indonesia Nikko Securities Indonesia

No but IB interest No PE but IB interest No but IB interest No but IB interest

Indonesia

Real Estate, Retail, Energy, Agriculture, Infrastructure Financial Services, F&B, Energy, Real Estate, Transport & Logistics, IT Financial Services, Energy, F&B, Manufacturing, Real Estate, Agriculture

Indonesia

Indonesia

Indonesia

Infrastructure, Hospitality, Real Estate

OSK Nusadana Asset Management

No but IB interest

Indonesia

Financial Services, Infrastructure, Energy, Manufacturing, F&B, Real Estate, Retail

Trimegah Securities

No but IB interest

Indonesia

Financial Services, Real Estate, Trans-port & Logistics, Pharmaceutical/ Bio-tech

19

Co-investors willing to engage in inclusive business including DFIs (DEG, FMO, AFD)
X
Co-Investors & Investment Sectors Mahanusa Fairways Capital UnoKapital

Current exposure
TMT & Financial Services

Planned entry

Natural FMCG & Energy & Food & Healthcare Hospitality Resources Retail Transport Beverage & Education & Tourism

Manufacture Real Estate & Industry & Housing

X X

X X

X X

X X

X
X X X X X X X X

X
X

X
X X X X X X X X X X X X X X X X X X X X

X
X X X X X X X X X X X X
20

PE Funds

Capsquare Asia ReCapital Creador Quvat UBS Credit Suisse Manulife Capital BTPN BNI 46

X X X X X X X

Institutional Investors & Banks

Independent Foundations & Family Funds

Astra Foundation Sampoerna Foundation

There is a missing middle in equity and a major gap in debt

Interview Findings
A gap or missing middle exists where early/mid stage growth firms lack funding, collateral and TA to scale ($2m - 10m) LPs place greater emphasis than GPs on equity versus debt in fund structure and deal sourcing Gap created by growth equity space (>$20m) populated by existing and new players geared for larger deals Indicate financial instruments likely to be preferred by investees and potential percentage of fund portfolio (Q13)

45%

Equity
35%

Equity

Debt

20%

30%

Debt

Blend Indonesia remains primarily collateral-dependent for debt with limited cash-flow financial products (i.e. higher interest & informal sector rates) Working and expansion capital are main barriers to Guarantee* early and growth stage IB opportunities Credit guarantees specifically designed for IB

30% 30%

5% 5%

Fund Managers
Technical Assistanc e
Over 80% of Fund Managers and Co-Investors recognize need and value in TA facility for investee training, advisory support and risk management

Co-Investors

Defined as credit guarantee (i.e. long-term purchase agreement, performance bond, etc)
Source: Interviews with Fund Managers & Co-Investors

Donor Preferences
Donors and development agencies are increasingly interested in market-based solutions Technical Assistance:
AusAID Partnership for Rural Economic Development, UNDP inclusive business development GIZ USAID

Investments
Proposed KfW equity investments in Social Enterprise Fund (start ups) IB debt investments of IFC, DEG, FMO\ Issue of security
22

AGENDA
1. What is IB and the purpose of our study? 1. Macro-economic context for IB in Indonesia 2. Inclusive Business Models in Indonesia 3. IB Investments 4. Recommendations for ADB Support

23

Funding
1. Funding is available (Banks and other financial products) Access to funding remains a challenge because of inherent issues from banks (collateral, financial reports, limited product scope)
there is a funding gap for IB IB companies are interested in equity (50%) and debt (50%) financing between $0.5 and $20 million We need to develop a specific deal sourcing mechanism for IB Model that can connect business opportunities with 24 funds/investors

1.

Fund Design Recommendations

Helping high performing social enterprises scale to achieve market returns
Strategy for social enterprises and SMEs in the larger companies value chains Address equity requirements beyond the scope of seed and social venture capital Address debt requirements of equity investees so that equity goes further Identify impediments to growth and profitability - technology gap - management skills - strategic alliance Offer technical assistance /grant support to help companies invest in areas that are typically underinvested due to long-term, public good nature of returns (ADB/ SNV assist to develop and raise social enterprises to level attractive to PE funds)

Classification of business models

Above market returns

Business

Inclusive business

1
Social enterprise

Below market

Low

Positive externalities

High

Improvement in human development indicators Source; Dalberg analysis

Fund Design Recommendations

Helping businesses become more inclusive
Strategy for social enterprises and SMEs in the larger companies value chains Address equity requirements beyond the scope of seed and social venture capital Address debt requirements of equity investees so that equity goes further Identify impediments to growth and profitability - technology gap - management skills - strategic alliance Offer technical assistance /grant support to help companies invest in areas that are typically under-invested due to long-term, public good nature of returns (ADB/ SNV assist to develop and raise social enterprises to level attractive to PE funds)

Classification of business models

Above market returns

Strategy for Business & growing SMEs

Offer concessional debt to account for higher risk and value of social benefit created by firms wishing to expand inclusive operations Provide credit guarantee facility to select SMEs that deliver high financial and social impacts Offer technical assistance /grant support to help companies invest in areas that are typically under-invested due to long-term, public good nature of returns (ADB/ SNV assist to develop and raise social enterprises to level attractive to PE funds)

Business

Inclusive business

1
Social enterprise
Below market

Low

Positive externalities

High

One key need for TA (project management facility): Mapping Framework

Rigorous selection & development steps Multiple filters along the way Pre-selection Due Diligence Final Selection

Development
Owner Acid Test

Review & Analysis

Pool of Potential Companies

27

Design Parameters for the IB Financing

Sectors Deal Size
Target Sectors: Companies say Agriculture, Energy, Consumer Goods 2nd category: financial services, basic services, health

Deal Size: .5 to 5m vs 2 to 10m

Fund Size: 60m to 100m; avg deal size 2m to 5m Investment: BLENDED: Debt 60%; Equity 35%; Guarantees 5% Expected Return: 10-12% v. 6% v. 25% depending on investment mix GP: externally managed

Investment Strategy

Investment Exits

Generally MBOs and strategic sales Preliminary interest from DFIs and Co-investors such as Credit Suisse, Manulife, UBS and UnoKapital, Quvat

Fund Manager/CoInvestors

TA Facility

Need for TA facility with three core components: Incubator, impact assessment, post-investment technical assistance
28

Questions?
Thank you
29

Further Information
30

Key Questions for Feedback Session

Sector Focus: Does the sector focus consistent with your own assessment (as a company, investor and/or donor?) Fund and Deal Size: Is the fund size adequate for the IB opportunities in the Indonesian market? Is the deal size filling a current gap in the marketplace? Will it crowd-in other investors? Return Profile: Is the IRR per deal achievable? How might you distribute the investment strategy between debt, equity and other financing strategies? Exit: What are the most likely exit strategies? Co-Investor/Donor Interest: What is your degree of interest in leveraging investment and/or investing in such a fund? What is your decision parameters? TA Facility: How would you structure a TA facility? Would you focus the TA in the core areas outlined? Other Recommendations: Are there any other recommendations we should consider? Sectors? Government incentives? Niche?

31

Key Questions
How to strengthen the environment for IB How does an inclusive business fund crowd-in investment and not crowdout? Government incentives for agricultural growth often do not consider IB Does the company CSR mandate provide a specific opportunity in Indonesia? If ADB is a co-investor: Are we overemphasizing equity? How patient does capital need to be? How should investors plan to exit? What is the right package of equity, debt and TA to meet early and growth stage SEs and SMEs needs? Is TA a solution? Is a fund necessary at all? Would a project management facility (TA) not be enough?
32

Fund Manager Recommendations for IB Fund

Sectors
Clean energy, financial services, natural resources (incl agriculture) and healthcare
IRR expectation >15% with companies active in sectors noted above Investee SMEs need solid management/track record, transparency and good operational/cultural fit A sense growth stage SMEs more interested in debt and credit guarantees than equity Preference to work with a mix of equity and debt Minority stake + Board representation bare essentials Growth stage SMEs where possible with credit/performance guarantees Interest in convertible feature to equity with supporting warrant for assurance. Deal size US$ 2-15m with 10-15% IRR (average equity/blend 20% - less for debt/smaller firms) 3-5 year term for debt (rollover option) and 4-8 year time horizon for equity Competitive management fees/carry (min 2:20) and hurdle rate (TBA) Local debt rate up to 10% with 5 year term + business risk premium (possibly more for small firms) MBO/MBI more likely Quality pipeline of investee SMEs crucial for commitment/success Experienced/reputable GP with asset class and in-country results commercial tie-ins amy apply Some LPs prohibited from or prefer option to invest on individual deal basis Assessment/measurement and systems/reporting on non-financial performance and other incentives (i.e. social/environmental impacts) ADB seed funding and TA facility key to attract co-investors and mitigate investee risks/performance Tied (dedicated) or independent (ad hoc expertise) TA is a consideration

Company Performance

Investment Strategy

Investment Exits

Fund Manager/CoInvestors

TA Facility

33

What is Inclusive Business?

Business models that involves BoP (Base of Pyramid): A business model that
creates shared value by integrates the low income segment in the company s core business activity as part of the value chain

BoP as
Supplier Consumers Distributors

Employees

Addresses a systemic issue:

examples e.g. energy requirement access to clean water nutritional needs education credit access techniology etc.
Social Business Inclusion Economic Benefits

Inclusive Business Business Philanthropy Non-Profit Commercial Venture ProfitMaking

34

How Inclusive Business evolve in Indonesia?

Inti Plasma: Inclusive Business Model 1 Installment Payments Avalist 3

BANK
2

Feasibility aspect

Core Company

MoU
Net Income Plasma

6
4

Cooperative (farmers as member)

Production Cost Product sales/marketing

35

Real GDP Growth

36

Indonesia has a vibrant SME Sector, many of them providing employment for the poor
Size of Enterprise Assets Annual Turnover

Micro Small

> IDR 50,000,000 IDR 50,000,000 (50 million rupiah) to IDR 500,000,000 (500 million rupiah); IDR 500,000,000 (500 million) to IDR 10,000,000,000 (10 billion rupiah);

> IDR 300,000,000 IDR 300,000,000 (300 million) to IDR 2,500,000,000 (2.5 billion rupiah). IDR 2,500,000,000 (2.5 billion rupiah) to IDR 50,000,000,000 (50 billion rupiah).

Medium

Large

More than IDR 10 billion

More than IDR 50 billion

37

INDONESIAS SIX ECONOMIC CORRIDORS

MP3EI: For 2012, the Indonesian Government had been preparing for the ground-breaking for 110 projects related to the MP3EI program valued at Rp 368.6 trillion (USD 40.95 billion). These projects are divided among six corridors.

Banda Aceh Medan

5
Pekanbaru

Tanjung Pinang Jambi

Padang

Pontianak Pangkal Pinang

Gorontalo
Samarinda Palu

Manado Ternate Sorong Manokwari

Tumbangsamba Melunda Bandjarmasin

6
Jayapura Wamena

Palembang Bengkulu Bandar Lampung

Legend 1 Sumatra

Jakarta

Makassar Surabaya

4
Bali Nusa Tengarra Merauke

2 3 4 5 6

Java Kalimantan

Bali - Nusa Tenggara

Sulawesi Papua Maluku

1 Sumatra: Natural resource production

2 3

and processing center Java: driver for national industry and service provisions Kalimantan: Production and processing of national mining and energy

Sector : Indonesia Investment Coordinating Board BPKM

Kendari

Ambon

4 5 6

Bali-Nusa Tenggara: agricultural, plantation, fishery, oil and gas, and mining Sulawesi: gateway for tourism and national food support Papua-Maluku: development of food, fisheries, energy, and national mining 38

Supporting Macro Trends

39

POOR IN INDONESIA

54.20

49.50

43.20

48.00

38.70

37.90

38.39

37.34

39.05

36.15

35.00

35.10

37.17

34.50

34.97

32.53 14.15

40.10

30.00

27.20

25.90

28.60

22.50

24.20

21.60

23.40

19.14

18.41

18.19

17.70

17.40

17.42

16.66

17.75

15.97

16.58

15.10

13.70

15.42

1976 1980 1984 1987 1990 1993 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Populasi Penduduk Miskin (Juta Jiwa) Population of Poor (Million)

Source: University of Indonesia Faculty of Economics

11.30

Percentage of Poor to Population Persentase Penduduk Miskin (%)

13.33

31.02

40

UNEMPLOYMENT AND UNDER-EMPLOYMENT (AGE 15+, %)

35 33.4 30.6

30

25

24.2

25.1

23.3

22.1

21.2

18.9

20
UNEMPLOYED & UNDEREMPLOYED (MILLIONS)

15

15.5 12.6 11.8 9.1

65.2 74.91
72.4 78.4

10

8.4
80.9

8.1
81.6

7.1
82.7

6.6
83.0

0 2000 2005 Unemployment Female Percentage

41
Source: BPS,GoI

2006

2007
YEAR

2008

2009 2010 2011

Underemployment

Indonesia BoP Context

INFORMAL EMPLOYMENT BY REGION (AGES 15+ at %)
90 80

70

60

50

40

30

20

10

2001

2010

42 Source: BPS Quarterly Wage Statistics

Agriculture, Manufacturing, Consumer Product, Renewable Energy and Tourism are the most attractive sector with IB Model
Sector Potential BoP Participationt (rank 1 [low] 4 [high]) 1 Agriculture Manufacturing/light manufacturing Consumer Product/Retail Renewable Energy Tourism Telecommunication Forestry Transportation Finance Health, Water, Housing Systemic problem solving IB Opportunit y/Model Potential for social impact Commodity located base

4 High High High High Medium Low Low High High High Medium High Medium High Medium Low All country Java Java, Sumatra All country All country W. Indonesia All country Java, Sumatra

Interview in process Interview in process

43

Indonesia PE Investor Mix and Deal Type

(2010 - 2011)

PIPE - private Investment in public equity Notes: excludes deals <$10M; does not include Bridge Loans, Franchise Funding Seed/R&D, Concept & Distressed deals; excludes Infrastructure, Real Estate, REITs, Hotels, Lodging & Property deals 44 Source: AVCJ; BCG, E&Y, Bain Analysis 2012

Examples of IB 1: Refurbishing marketplaces : transformation of traditional buying centers

Pasar Induk Osowilangun, Surabaya (East Java)

Pasar Induk Beras, Tangerang

45

Pasar Induk Tanah Tinggi, Tangerang

Pasar Induk Jaka Baring, Palembang (South Sumatera)

46

Examples of IB 2: Seaweed: scalability keeping it simple

10,000ha marine concession for seaweed Long-line method for farming - easy to replicate - scalable by farming groups - unique design of farming apparatus easy to build and; mobile easy to move Strong domestic and export demand High value-added downstream products
47

Examples of IB 3: Using palm fruit waste as feedstock for Biomass Plant

Turns waste into fuel for energy Ready supply of feedstock Addresses energy shortage in rural areas (Feed-in or supply into Grid) Expansion from existing business

48