Indonesia’s sovereign wealth fund (SWF) INA and China’s Silk Road Fund (SRF) are picking up a 40% stake in Indonesian state-owned pharmaceutical company PT Kimia Farma’s subsidiary, Kimia Farma Apotek, for 1.86 trillion rupiah ($120 million), according to a statement on Sunday.
Kimia Farma Apotek will use the money for business expansion and working capital, the statement added.
In July 2022, SRF signed an agreement with INA to invest around $3 billion in Indonesia, especially in companies that promote economic connectivity between both nations.
Both the investors will also participate in Kimia Farma’s rights issue, which was approved in a shareholders’ meeting last month. The company plans to release 25% of its shares to the public in the issue, with a fundraising target of around 4.5 trillion rupiah ($292.76 million). It will use the proceeds to support expansion plans and improve healthcare services in Indonesia.
Following the transactions, Bio Farma’s ownership in Kimia will be reduced but it will still own a majority stake in the company. Bio Farma, an Indonesian state-owned enterprise, holds a 90.02% stake in Kimia Farma while the rest is owned by public investors.
President Director of Kimia Farma, David Utama, stated that with the investment from INA and SRF, Kimia Farma can expand its business network to foreign countries. “The investment will also strengthen the company’s capital structure and improve our operational and financial performance,” he said.
Kimia Farma’s business spans pharma, raw material, manufacturing, pharmacy, and healthcare services. Currently, it has 10 manufacturing plants, 48 distribution centres, 1,187 retail pharmacy stores, 410 healthcare services, and 72 diagnostics laboratories.
In the first half of 2022, Kimia Farma’s revenue decreased 20.4% on an annual basis to 4.4 trillion rupiah. In the same period, Kimia Farma suffered losses to the tune of 205.12 billion rupiah, compared with 57.6 billion rupiah in profits in H1 2021 due to a decline in demand following the pandemic.