Following a crash in valuations of high-growth companies in the past three years, the performance of businesses in Indonesia is expected to improve, according to Patrick Walujo, co-founder and managing partner of private equity major Northstar Group.
“The business environment in Indonesia, generally speaking, is very strong. The government has done a good job in the past seven years in creating an environment that is healthy for businesses,” Walujo said at a fireside chat at DealStreetAsia’s Indonesia PE-VC Summit 2023 in Jakarta on Thursday.
Most companies, however, will have to focus on the fundamentals, the basic stuff, and make sure that they continue to be good at what they are doing, reducing costs along the way.
“The market is still going to be robust. I don’t see any reason to be exceedingly worried in the near term,” Walujo added.
Walujo’s session, titled “Straddling a PE and VC strategy to tap new digital scripts in Indonesia”, was a timely discussion on Northstar’s foray into the venture capital space.
An early backer of Indonesia’s Gojek (now part of GoTo Group), Northstar last week announced the first close of its early-stage VC fund at around $90 million.
The vehicle, launched last year, is Northstar’s first VC fund and has a target of $150 million. The company expects to achieve a second close of $120 million in Q1 2023 and a likely final close of $150 million by mid-2023, the sources added.
Northstar Ventures 1 LP (NSV I), as the vehicle is called, will invest between $1 million and $10 million per deal, DealStreetAsia had reported earlier. Its core focus areas are consumer Internet, financial technology, and enterprise software and mainly targets startups in Indonesia and, to a lesser extent, other countries in Southeast Asia.
Walujo said getting into the VC space is not totally new for Northstar. He said the firm has been doing early-stage investments from its balance sheets for seven years, and raising a VC fund is an integral strategy for the PE firm.
“We go in early and then at certain stages, our PE can come can in with capital. We have done this many times with a pretty good track record… This is not an infliction point but a continuation of what we have been doing,” he stressed.
While exits in Southeast Asia remain a challenge for VC investors, Walujo said he is not particularly worried about it, saying even in difficult times, investors can exit.
“If you are invested in a good business, it is easy to make an exit; if you run a bad business, it is terribly difficult to find an exit route,” he added.
Northstar, Waluyo further said, can bring value-add to the table in terms of sharing experience and learning as a PE investor. He stressed that the firm’s plan remains unchanged — to stick to what it knows and deliver the best returns for its investors.