Matrix Concepts’ Indonesian JV to kick off in two months

KUALA LUMPUR (March 18): It has been nearly a year since Matrix Concepts Holdings Bhd announced its plan to jointly develop an Islamic financial district in Pantai Indah Kapuk 2 (PIK 2), Jakarta, Indonesia with an Indonesian consortium comprising PT Bangun Kosambi Sukses (BKS) and PT Nikko Sekuritas Indonesia (NSI).

BKS is jointly-owned by the Agung Sedayu and Indonesian conglomerate Salim Group, which developed PIK 2 Sedayu Indo City in Indonesia, while NSI is an investment banking firm in Indonesia.

*Matrix expects FY19 performance to at least match FY18’s

The three parties have set up a joint venture (JV) company, Fin Centerindo Satu (FCS) with a capital of US$100 million (RM409 million). BKS will hold a 40% equity interest and Matrix Concepts and NSI 30% stake each.

Matrix Concepts executive deputy chairman Datuk Lee Tian Hock, said this will be the property developer’s maiden venture into Indonesia and he is hopeful the project will be kicked off in the next two months.

He said the earnings contribution to the group will, however, only be seen after the next two years.

The project will be developed on 3.6 hectares in West Kosambi Village, Tangerang, he said.

“It is an integrated mixed development comprising commercial towers with office and retail components, which has a gross development value worth US$500 million and will be developed over eight years.

“The project is mooted by the Indonesian government in its quest to set up an Islamic financial district in view of its large Muslim population. Indonesia is the highest populated country in Asean. And only 15% of the population owns a home,” he said.

Lee said demand for housing there will grow on the back of the rising income level of its people and is hopeful to capitalise on it now that the Malaysian market is becoming saturated.

He said this first venture in Indonesia will give Matrix Concepts more insight into the property market condition there, which will enable it to tap into future opportunities.

Last Tuesday, Matrix Concepts proposed to raise up to RM147 million via a private placement to third-party investors to be identified later to fund its Indonesian financial district development JV, which the exercise could be implemented in multiple tranches within a six-month period.

From the proceeds, RM146.35 million is intended to fund Matrix’s equity participation in FCS, it said in a filing to Bursa Malaysia.

RHB Research analyst, Loong Kok Wen, in a report dated March 13, said although the market may be cautious on the potential risks involved – since Indonesia is a new market for Matrix, the venture is worthwhile because the project is backed by a well-known conglomerate.

“The local property market is becoming more saturated and Indonesia has a large population that should support long-term demand for properties,” she said.

Loong also raised the FY20 and FY21 earnings forecasts by 1% to 2% as the research house incorporate the earnings contribution from the JV project.

Apart from Indonesia, Matrix is also seeking to develop more projects overseas.

In Australia, being its first overseas venture, Matrix plans to launch another two projects – Greenvale and St. Kilda – worth a combined gross development value A$110 million (RM289.81 million) over the next three years, said Lee.

“The proceeds from the first project, M. Carnegie, which has been completed, will be reinvested into the two new projects,” he said, adding that the group has no plans to increase its landbank in Australia soon.

This article first appeared in The Edge Financial Daily, on March 18, 2019.

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