China‘s state-owned Silk Road Fund (SRF) has signed an agreement to invest up to 20 billion yuan (around $2.98 billion) in Indonesia through the country’s sovereign wealth fund INA, the two funds jointly announced on Monday.

As per the agreement, the investment scope includes various asset classes of funds, and all business sectors open for foreign investment in Indonesia, especially companies that promote economic connectivity between Indonesia and China.

“We believe that investment in Indonesia and the region has high potential, especially when conducting it together with INA,” said Yanzhi Wang, President of SRF in the statement.

The parties intend to leverage on their respective market insights, close connections with relevant local business communities, deal origination capability and portfolio management expertise. “INA intends to invest together with SRF while also being open to the possibility of inviting other investors,” stated Ridha Wirakusumah, Chief Executive Officer of INA.

The SRF is not the first partner of INA. In 2021, INA invited several foreign investors including Singapore’s GIC, the Abu Dhabi Investment Authority (ADIA), and Abu Dhabi Growth Fund (ADG) to participate in Indonesian tower operator Mitratel’s initial public offering (IPO).

The UAE has pledged to invest $10 billion with the INA.

In 2021, the INA also explored potential investments in several strategic port locations in Indonesia with the Dubai-based port operator DP World, with which it signed a Strategic Alliance Agreement (SAA) for an investment commitment of up to $7.5 billion. 

The wealth fund also received investment commitments from global investors for more than 300 trillion rupiah ($20.8 billion) in the transportation, logistics, maritime, and digital infrastructure sectors.

This includes the establishment of a $3.75 billion toll road investment platform with Canada’s Caisse de dépôtet placement du Québec (CDPQ), APG Asset Management (APG), and the Abu Dhabi Investment Authority (ADIA).

This year, INA plans to close more deals in 2022 as it balances the aim to boost investments in the country’s much-needed infrastructure and the fast-growing digital ecosystem.

In April this year, the fund signed two agreements to invest in toll roads on the islands of Sumatra and Java worth more than 39 trillion rupiah ($2.72 billion). INA’s chief executive Ridha Wirakusumah said at the time that the fund is considering to invest in sea ports, geothermal, and healthcare projects.

The wealth fund is also exploring investments in technology, notably digital infrastructure, and startups with a valuation of more than $1 billion. The impressive growth clocked by the technology sector during the pandemic era has made it attractive to investors, Masyita Crystallin, spokeperson of INA said.

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