Milbank LLP advised Indonesia state-owned pharmaceutical company PT Kimia Farma Tbk (“KAEF”) and its subsidiary PT Kimia Farma Apotek (“KFA”) on a strategic minority equity stake sale to a consortium of investors consisting of China’s Silk Road Fund (“SRF”) and Indonesia’s sovereign wealth fund, Indonesia Investment Authority (“INA”). Under the terms of the agreement, SRF and INA will collectively acquire a significant minority stake in each of KAEF and KFA as part of their equity investment in the companies.
SRF and INA’s investment is purposed towards funding KAEF and KFA’s strategic business expansion plans, working capital needs and initiatives to strengthen operational efficiency. The investment will also enable KAEF to expand their business operations internationally.
SRF and INA’s investment in KFA was completed on December 27, 2022 and followed the signing of the definitive transaction documents by the parties at the 2022 Business 20 summit in Bali, Indonesia on November 13, 2022.
“We are pleased to have represented KAEF and KFA on this transformative joint investment in Indonesia’s healthcare sector,” said Milbank partner Jacqueline Chan, who led the transaction. “Alternative financing will support the Indonesian government’s efforts to accelerate development of the industry, improving healthcare services and offerings in the country. We’re honored to continue supporting key players in the Indonesian marquee sectors, particularly in the current investment climate where international investors’ appetite for opportunities in Indonesia, the largest economy in Southeast Asia, continue to grow at an increasing rate.”
The Singapore-based Milbank team also included lead associate Min Kim and associates Stephanie Kam, Hua Chan, Zhen Kua and Claire Hooi.
Established in 1817, Kimia Farma was the first pharmaceutical industry company in Indonesia and today provides integrated health services from upstream to downstream. Silk Road Fund was established in Beijing in 2014 to provide funding and financing support for trade and economic cooperation and connectivity. Indonesia Investment Authority is Indonesia’s sovereign wealth fund contributing to the country’s sustainable economic development. In July 2022, INA and SRF established an investment framework agreement that aimed to invest up to US$2.8 billion in the Indonesian economy and this transaction marks one of the first joint investments made by INA and SRF in Indonesia.
