This article first appeared in The Edge Financial Daily on September 20, 2019

KUALA LUMPUR: Khazanah Nasional Bhd is divesting its entire 55% stake in PT Lintas Marga Sedaya (LMS), the concession holder and operator of Indonesia’s Cikopo-Palimanan (Cipali) toll road, to the Canada Pension Plan Investment Board (CPPIB) and PT Astra Tol Nusantara (Astra Infra).

The 55% stake in LMS is currently held by PLUS Expressways International Bhd, a subsidiary of UEM Group, which is wholly owned by Khazanah.

In a statement yesterday, CPPIB said it will take up a 45% stake in LMS, while the remaining 10% stake will be taken up by Astra Infra’s wholly-owned unit PT Baskhara Utama Sedaya (BUS).

As BUS is an existing owner of a 45% stake in LMS, the acquisition will increase the company’s stake to 55%.

CPPIB did not disclose the acquisition price, but Bloomberg reported last Friday that Khazanah received an offer of about US$500 million (RM2.1 billion) for its stake in the 117km toll road

CPPIB said yesterday that the transaction is expected to be completed in the fourth quarter, subject to customary closing conditions, including regulatory approvals.

CPPIB senior managing director and head of Asia-Pacific Suyi Kim said the fund’s first infrastructure investment in Indonesia would deepen its commitment to the Asia-Pacific region as well as its focus on investments in new markets with attractive return and risk characteristics.

CPPIB managing director and head of infrastructure Scott Lawrence said the Cipali toll road provides CPPIB access to a vital infrastructure development supported by rising motorisation rates in one of the most densely populated and economically productive regions in Indonesia.

“We are pleased to invest in the Cipali toll road alongside Astra Infra, a knowledgeable and sophisticated local partner, and look forward to a successful long-term relationship between our two organisations,” he said.