Bakrie Group's Ridwan Plans Indonesia-Focused Stock Hedge Fund

Edwin Ridwan, who helped set up the proprietary equity trading desk of Bakrie Group last year, is seeking capital to start an Indonesia-focused hedge fund that will bet on rising stocks. 

Ridwan, 41, is in talks with the Bakrie Group, a palm oil- to-property empire controlled by Indonesian billionaire politician Aburizal Bakrie and his brothers, to set up the hedge fund, he said in an interview from Jakarta. Siddharta Moersjid, a spokesman for Jakarta-based PT Bakrie & Brothers, said he couldn’t give any information at this stage. 

“I’m hoping to raise this fund, if possible, with the Bakrie Group,” Ridwan said. “It’s tough to find seeders from the local market; most people don’t even know what a hedge fund is.” 

HB Capital Partners’ Komodo Fund is currently the only Indonesia-focused hedge fund managed from Jakarta, according to funds tracked by Bloomberg. Bakrie & Brothers, the holding company for several listed Bakrie Group units, said in December 2009 that it planned to start new funds aimed at foreign investors. 

The trading desk that Ridwan set up in November is investing Bakrie Group’s capital in equities and aims to eventually manage third-party money, he said. Ridwan said he hopes to start the fund, to be called Amandana Capital, within six months and is seeking $10 million to $15 million in seed capital, in return for a stake in the management firm or a share of the fees that it earns. He aims to raise $50 million to $100 million from investors during the fund’s first year, he said. 

The fund will bet on rising prices of companies earning most of their revenue from Indonesia or have a majority of their assets there, he said. The companies the fund can invest in may include Singapore-based Petra Foods Ltd., the largest supplier of chocolate products to Indonesia, and London-based Churchill Mining Plc, owner of a thermal coal project in Indonesia. 

‘Entry Point’

“We are going to invest in non-Indonesian stock exchange listed companies to expand our investible universe,” Ridwan said. 

The fund will focus on liquid, or easily traded, securities and will also invest in companies that are preparing for initial public offerings, he said. It may also take significant minority positions in listed companies to influence their strategies and improve corporate governance, he said. 

The decline in Indonesia’s benchmark stock index this year has provided a “good entry point,” Ridwan said. The Jakarta Composite Index has fallen 7.7 percent this year.

“I believe in the Indonesian economy going forward,” Ridwan said. “We’re going to have a tremendous period in the next three to five years.” 

Indonesia’s economy grew at 6.9 percent in the last quarter, the fastest annual pace in six years. Rising consumer spending is driving the expansion in the world’s fourth-most populous nation, increasing pressure on the central bank to restrain price gains and protect purchasing power.

‘Bottom Out’

The Jakarta Composite Index has fallen almost 10 percent from its Dec. 9 record high on concern the central bank has fallen behind regional peers in boosting rates to cool inflation.

The stock market is set to “bottom out” in the next two to three months, and Indonesia’s banking, utilities and commodities industries will likely outperform, Ridwan said. 

Ridwan has more than 15 years of equity trading and investment experience, including a stint at Jakarta-based PT Danareksa Sekuritas. Ridwan co-founded CFAdvisors, a credit rating advisory firm, in 2002 and Bakrie Group was one of its clients, he said. 

Bakrie, the patriarch of the family business that includes PT Bakrie Sumatera Plantations and PT Bakrie Telecom, is Indonesia’s 10th-richest man, according to Forbes Asia. Source: Bloomberg