Saratoga expands into retail business

JAKARTA. Publicly listed investment firm PT Saratoga Investama Sedaya (SRTG) has expanded its business portfolio by acquiring local lifestyle retailer PT Gilang Agung Persada (GAP), a move which is expected to help Saratoga tap into the country’s growing consumerism.

GAP is a local company that offers a number of luxurious apparel and jewelry brands, such as Guess, Gap, Banana Republic, Nautica and Swarovski.

Saratoga president director Sandiaga S. Uno said on Tuesday that last month his firm acquired a 4.17 percent stake in GAP worth US$5 million. Saratoga also holds an option to buy exchangeable bonds worth $167,000 that will provide an additional 1.67 percent of shares in the company.

“This move provides a great opportunity to strengthen our investment in the consumer sector, as well as to capitalize on Indonesia’s market, which is driven by its growing middle class,” he said.

An estimated 90 million Indonesians will join the country’s consumer class by 2030, giving the country a total of 135 million middle-class consumers and so creating a potential business value of $1.8 trillion, according to a report by consulting firm McKinsey & Company.

Quoting data from the Trade Ministry, Sandiaga said that fashion industry itself generated Rp 181 trillion ($15.3 million) or 2 percent of the country’s gross domestic product (GDP) last year.

GAP president director Ronnie Bong said in a statement that he expected his firm could grow faster with the investment from Saratoga.

Meanwhile, Saratoga chief financial officer Jerry Go Ngo said GAP was probably not going to be very significant as a revenue booster for his company, but he believed the acquisition was strategically important.

Ngo said that other than expanding into the fashion sector, Saratoga was also planning to move its business into the food and beverage sector.

“This [food and beverage industry] is something that we will always look into. A consumer economy like Indonesia’s obviously has to start with basic needs like food,” he said.

Ngo said that Saratoga was still in discussions over plans to invest in potential food and beverage companies.

He said the process to finally acquire a company would take some time as his firm usually observes due-diligence by investigating targeted companies before finally investing its money in them.

“Last year, for example, we looked at 100 situations [companies]. We reviewed half of them and then we did due diligence on 20 of them, but we invested in only three or four companies,” he said.

Ngo said his firm would also plan to strengthen its energy business portfolio by tapping into mini-hydro power plants in addition to developing large and small geothermal power plants.

Saratoga’s revenues more than doubled to Rp 3.09 trillion in the first half, with its oil refinery segment recording the highest growth by tripling to Rp 3.05 trillion from the same period last year.

Saratoga has stakes in several publicly listed firms, including miner Adaro Energy (ADRO), plantation firm Provident Agro (PALM) and tower operator Tower Bersama Infrastructure (TBIG). (Khoirul Amin)