http://www.demystifyasia.com/indonesian-conglomerates-involvement-startup-scene/
Posted By: Shona
July 4, 2016
In Indonesia, the startup growth over the past two years has been
very promising. According to research, there were more than 1500 local
startups in 2015 ranging from games, educational applications and
e-commerces and information.
As the country with the highest population in South East Asia, as
well has the largest number of internet users, the startup industry
based in tech certainly has strong potential for tremendous expansion in
the coming years. In an effort to remain on the forefront of of the
startup lottery, huge investments have been made in the country, with
the largest one for Tokopedia at USD$100 million. This investment was
made by Sequoia Capital and Softbank, two top-tier investment groups
that operate in the region. In addition to growth in investments,
incubators and accelerator programs are also a driver of the growth of
the technology startup ecosystem.
In Indonesia, a contributing factor to most of the startups are is
the involvement of the Indonesian conglomerates; those who own large
amount capital and whose businesses have been entrenched in Indonesia
for decades. The next generation within the families of conglomerates
are facing new challenges in doing business in today’s globalized-world.
To remain relevant and retain their status, many
next-generation-tycoons, are getting involved in the startup scene.
Below are Indonesian conglomerates who are engaged in the startup
industry.
Lippo Group
Lippo Group is an Indonesian company founded by notable tycoon, Mochtar
Riady. At first, it ran Lippo Bank which was renamed and changed
composition of its share into Bank CIMB Niaga. The company then also
managed property and real estate, operating across Asian countries such
as Indonesia, China, Hong Kong, Macao, Philippines, Singapore and South
Korea with total assets worth 11 billion USD. It is also listed on
various stock exchanges in Hong Kong, Indonesia and Singapore with at
least 15 subsidiaries. In addition to the property business, the company
is also involved in retail, telecommunications, news and media, and
various other types of businesses. Based on Forbes report, the Riady
family is the ninth richest tycoon in Indonesia. Total wealth of Lippo
Group is valued at 2.2 billion USD (around Rp 29 trillion) which derived
from those various business lines.
As the internet marketplace showed its lucrative growth, Lippo Group
initiated an investment in e-commerce. With investments of 500 million
USD, Lippo Group started operating e-commerce site Mataharimall.com in
2015 to compete with other big name such as Lazada and Tokopedia. This
e-commerce platform actually is the online version of the existing store
chains operating for decades, Matahari Mall, owned by Lippo Group that
spread across the archipelago. The Lippo
group recently partnered with Singapore based Grab, which was looking
for support in Indonesia, to help with deliveries for Mataharimall.com.
“Online commerce is a US$100 billion opportunity. MatahariMall will
be number one. There is nothing like it in Southeast Asia. Our vision is
to build the most powerful ecosystem that brings together buyers and
sellers to do business anytime and anywhere” said John Riady, the
director of Lippo Group during the launching of mataharimall.com.
Recently, in March 2016, the grandson of Mochtar Riady, who is acting
as Director of Lippo Group, John Riady, started to invest in venture
firm Venturra Capital. The group’s capital is 150 million USD, or
equivalent to 2 billion IDR. In the official statement, Venturra Capital
will prioritize investments in startups from Indonesia and Southeast
Asia. The startup targets range from e-Commerce, financial services,
healthcare, and education. The firm, led by Stefan Jung, former founder
and managing partner of Rocket Internet Southeast Asia; Rudy Ramawy,
former country director at Google Indonesia; and John Riady, current
director of Lippo Group.
“Our mission in Venturra is to provide capital, operational
empowerment and market access to the founders of technology-based
innovative business and internet has the potential to transform the
industry,” wrote Venturra Capital.
Djarum Group
Djarum is cigarette producer based in Kudus, Central of Java, owned by
Oei Wie Gwan. After Gwan passed away, the company is now run by his son,
Robert Budi Hartono and Michael Bambang Hartono. Forbes named the
Hartono family the richest in Indonesia. With total assets reachig $
15.5 billion (around Rp200 trillion), Hartono family also owns majority
shares in largest private bank in Indonesia, Bank Central Asia (BCA).
Hartono successfully steered the company to be largest cigarette
producer in the country. As the growth of the cigarette industry is
quite stagnant, Djarum then diversified its business line into several
lines. Djarum’s subsidiary, PT Hartono Plantation Indonesia, has oil
palm plantations covering an area of 30,000 hectares (ha) in the
Porcupine District, West Kalimantan. The company is also developing
timber plantations in East Kalimantan, covering land area of 20,000
hectares.
Beside for investments in those lines, Djarum also owns blibli.com,
an electronic e-commerce site with investments from Djarum amounted to 1
million USD yearly through its subsidiary, GDP Venture. Djarum created
GDP Venture to invest in startup and internet business. Another
successful project funded by GDP Venture is Kaskus, the largest online
community based in Indonesia. To gain a better angle on upcoming
startups, GDP Venture formed an incubator called Merah Putih Inc., a
startup incubator which aims to provide capital assistance for
innovative startup. The incubator’s successful portofolio includs
Dailysocial, KrazyMarket, Infokost, Bolalob, Lintas.me, infokost.net,
kincir.com and Mindtalk.
Sinar Mas Group
Sinar Mas Group is another wealthy tycoon in Indonesia who owns hundreds
of subsidiaries across the country. The company was founded in 1962 by
Tjipta Eka Widjaja. At the beginning, the company’s business portfolio
mostly focused on pulp, paper and palm oil producers. But as the company
grew, it began managing wide ranges of business lines including
agribusiness, property and real estate, mining, financial services
ranging from bank, multifinance, and insurance.
As the internet based technology began growing rapidly in Indonesia,
Sinar Mas Group set up a venture capital in 2015 named Sinar Mas Digital
Ventures (SMDV). SMDV together with Lippo Digital Ventures and RMK
Sovereign Capital Ventures, on January 15, 2015 invested Serie A
investment amounted to 2 million USD for Giftcard.co.id. Secondly, SMDV
also invested in Female Daily Network value for 1 million USD. Then,
under one of its subsidiaries, PT Dian Swastika Sentosa Tb, runs
ecommerce business by purchasing point. In 2015, SMDV also invested in
Series A Investment totalling 2.6 million USD for Omise, a
Thailand-based payment gateway.
To fully commit to startup investments, Sinar Mas Group, through its
subsidiary, Sinar Mas Land, recently announced plans to build an
integrated smart digital city in Indonesia for startup companies,
technology leaders and digital communities. As reported in Jakarta Post,
the company’s CEO, Michael Widjaja, said that the construction would
start in 2017 on a 25.86-hectare plot of land in BSD City, South
Tangerang. The company has allocated Rp 2 trillion (US$151 million) in
cash to develop the digital hub.
“It’s our dream to build this place, an equivalent to Silicon Valley
in the US. We are not only inviting the companies but we want to build a
self-sustaining community,” he said in Jakarta on Tuesday. This
ambitious project will be finished in 10-15 years and plan to targeting
research centers, institutions and educational institutions that have
schools of technology and sciences.
Bakrie Group
Bakrie Group is a conglomerate founded by Achmad Bakrie in 1942. The
company’s business lines spread in in many areas, including Oil and Gas,
Real Estate, Infrastructure, Mining, Media, and Telecommunications.
Bakrie Group is one of the largest business groups in Indonesia, with 10
subsidiary listed on the Indonesia Stock Exchange. Currently, Bakrie
Group is chaired by Nirwan D. Bakrie (Chairman) and Indra U. Bakrie
(CO-Chairman). In 2004, Aburizal Bakrie retired from the Bakrie Group to
focus on his political career and now is the General Chairman of Golkar
Party, the second largest party in Indonesia.
In 2011, with a vision to expand the company line to include
technology startups, the company established a private investment firm
named Nusantara Incubation Fund. Bakrie Group’s CEO, Anindhya Bakrie
stated in the interview that the investment firm aims to support local
startups. The establishment of the investment firm was part of Bakrie
Group BtelVision2.0 program to widely reach internet markets.
“We expect another kind of Kaskus and startup to emerge, but it must
be owned by us. Although there will be others to invest, no problem. ”
In January 2014, a closed social network, Path, recorded getting C
round of funding amounting to 25 million USD from Bakrie Group. The
investment was deemed a significant move by Bakrie as Path users in
Indonesia are the largest, with 4 million users in 2014. Currently,
Bakrie Group is also working together with Converge Ventures, though
does not have total control over the operations of the company.
CT Corp
CT Corp. (formerly known as Para Group) is a group of companies owned by
tycoon Chairul established in 1987. The holding company owns several
business lines including bank, insurance, retail stores, plantation,
news and media, mining, property and real estate, and restaurant chains.
One of notable CT Corp internet-based portfolio companies is
detik.com, a highly popular online news platform in Indonesia. On August
3, 2011 CT Corp. acquired detik.com shares, value of 60 million usd or
equivalent to 521-540 billion IDR. Before being acquired by CT Corp,
detik.com shares were owned by Agranet Tiger Investment and Mitsui &
Co. Agranet has a 59% share, and the rest is owned by Tiger 39%, and
Mitsui 2%.
In February 2016, CEO of CT Corp. Chairul Tanjung announced that the
company is preparing to launch an e-commerce company. “Currently we are
preparing e-commerce so once it released, it becomes the champion. If we
don’t become champion, it is better to not launch e-commerce because
the line of our business is complete. There are hypermarket, department
stores, airlines, hotels, food and beverages, and also entertainment.
But we want everything is available in our e-commerce, “said Chairul.
Mitra Adiperkasa
Mitra Adiperkasa (MAP) is a retail company that was raised by Boyke
Widodo and his uncle Sjamsul Nursalim. Data from Forbes states that
Sjamsul has a fortune of $ 470 million (around Rp6.2 trillion) from
Gadjah Tunggal tire factory and retail MAP they have.
MAP is arguably one of the largest retail companies in Indonesia.
Some well-known brands commonly found in malls such as like SOGO, Planet
Sport, BANDAI, Starbucks, and others-are managed by MAP. With these
foundations, MAP has recently officially announced their e-commerce site
called MAP EMALL. The products are sold mostly in the form of fashion
and home furnishings as well as what is offered by retail MAP.
Salim Group
Salim Group is another notable conglomerate in Indonesia. It was founded
in 1972 by Sudono Salim (Liem Sioe Liong) and has subsidiaries such as
Indofood, the world’s largest instant noodle producer. It also owns oil
palm plantations (approximately 1,000 square kilometers) and logging
concessions. Besides, it also manages property, real estate and
entertainment industry for about 30 years.
Now, the company is run Anthoni Salim. In an interview with Japanese
media, Nikkei expressed his interest in investing in the e-commerce
industry. “We are ready to participate in e-commerce in Indonesia, which
has just begun. If you want to be successful [in e-commerce],
logistics, transportation management and IT architecture must be very
strong. ”
Though Salim Group doesn’t make direct investments to e-commerce
company, its subsidiaries do. Philippine Long Distance Telephone (PLDT)
Company, a Philippine based company with its largest shares owned by
Salim Group, invested 455 million USD or equivalent to Rp 6.2 trillion)
to Germany based tech company, Rocket Internet. Rocket Internet is the
conceptor of giant marketplaces operating across Asia, including Lazada
and Zalora. It is recorded that PLDT shares in Rocket Internet is
equivalent to 10% of total shares.
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