In Momentum Works’s 2019 predictions for Southeast Asia, we mentioned that as more VCs and more startups are emerging in the region – it is becoming harder for both parties to find the best deals. 

Indeed, when we look at Indonesia, since 2016 (when Go-Jek raised US$550 million and Alibaba took over Lazada), more and more VCs are either being set up or entering the country. 

The active VCs in Indonesia are typically either locally set-up or with their structure in Singapore. And some of our readers, hearing about news on their counterparts ‘buying’ a VC in Indonesia, asked us “how”?

The basics

To understand how to ‘buy’ a VC, it is important to understand the regulations on VC, i.e. what makes a VC legal. 

Here are some of the regulations of which Indonesia’s Financial Services Authority (OJK) has released:

  • POJK No 34/POJK.05/2015; concerning the business license & organization of venture capital
  • POJK No 35/POJK.05/2015; concerning the business implementation of venture capital
  • POJK No 36/POJK.05/2015; concerning good corporate governance of venture capital
  • POJK No 37/POJK.05/2015; concerning direct inspection of venture capital

Setting up VC Firm in Indonesia 

Based on article 2 POJK 34/2015, VC is established in the form of business entity, which can take one of the following types:

  • Limited Liabilities (PT)
  • Cooperatives
  • Limited Partnership (firma)

In the establishment of VC firms, the ownership of shares are limited for the following sides:

  • Individual Indonesian Nationals
  • Indonesian Legal Entity
  • Foreign Institution
  • Local Government
  • Central Government

A foreign institution is allowed to acquire shares at a VC firm by using either direct method (purchasing the issued shares) or indirect method (purchasing other financing instrument). However, foreign ownership (both direct or indirect) are limited to 85% of the firms. 

Similar to other financial institutions, a VC firm also required to have a minimum paid-up capital, in this case, would be IDR 50 Billion, roughly US$ 3.5 million. 

VC firms are also allowed to trade 85% of shares in the stock exchange. 

Applying for VC License to OJK

VC licenses in Indonesia are issued by OJK. In order to obtain a license, the director of the firm must fulfill and submit the completed application to OJK. 

The requirements are as follows:

  • Legality documents of VC
  • Identity documents of VC Shareholders, Directors, and Commissioners
  • Evidence of Operational Readiness, such as List of Assets, Evidence of Building/Office Ownership, Agreement Templates, and Tax Documents
  • Business Plan for the first 5 (five) years
  • Organizational Structure
  • Anti-Money Laundering and Anti-Terrorism Funding Implementation Guidelines
  • Good Corporate Governance Guidelines 
  • Evidence of full payment of the licensing administrative fee

After submitting the requirements, OJK will verify the authenticity of the documents, business plan, and legal compliance in a maximum of 30 workdays. Licensed VC needs to run the business for a period of 6 months and give a performance report to OJK at least 10 days after getting the license. Along with the reports documents needed to be entailed are: 

  • Copy of VC license 
  • Copy of stay permit for using foreign workforce or having a foreign board of directors, given by authorized institution 

Registered Indonesian VCs

As of October 2018, there are 65 registered VC in Indonesia

  1. PT Astra Mitra Ventura
  2. PT Bina Artha Ventura
  3. PT Celebes Artha Ventura
  4. PT Ivaro Ventura
  5. PT Lima Ventura
  6. PT Sarana Kalsel Ventura
  7. PT Sarana Lampung Ventura
  8. PT Sosial Entreprener Indonesia
  9. PT Vasham Kosa Sejahtera
  10. PT Ventura Ginat Asia
  11. PT Ventura Investasi Prima
  12. PT Ventura Investasi Utama
  13. PT Venturas Tunai Capital
  14. PT Sarana Jakarta Ventura
  15. PT Dana Mandiri Sejahtera
  16. PT Mitra Bisnis Keluarga Ventura
  17. PT Sarana Jatim Ventura
  18. PT Sarana Sulut Ventura
  19. PT Maju Raya Sejahtera
  20. PT Sarana Jabar Ventura
  21. PT Sarana Sumatera Barat Ventura
  22. PT Bahana Artha Ventura
  23. PT Sarana Sulteng Ventura
  24. PT Selaparang Finansial
  25. PT Sarana Kaltim Ventura
  26. PT Sarana Surakarta Ventura
  27. PT Sarana Bali Ventura
  28. PT Sarana Jateng Ventura
  29. PT Sarana Papua Ventura
  30. PT Sarana Sulsel Ventura
  31. PT Sarana Jambi Ventura
  32. PT Sarana NTB Ventura
  33. PT Sarana Yogya Ventura
  34. PT Sarana Kalbar Ventura
  35. PT Sarana Nusa Tenggara Timur Ventura
  36. PT Sarana Sumut Ventura
  37. PT Sarana Sultra Ventura
  38. PT Sarana Riau Ventura
  39. PT Sarana Maluku Ventura
  40. PT Insan Mulia Investasi
  41. PT Ventura Cakrawal Investama
  42. PT Sarana Kalteng Ventura
  43. Suwadana Ventura Capital
  44. PT Sarana Aceh Ventura
  45. PT Techo Venture Business Synergy
  46. PT Esta Dana Ventura
  47. PT Mandiri Capital Indonesia
  48. PT Nusa Makmur Ventura
  49. PT Corpus Prima Ventura
  50. PT Cakrabuana Ventura Indonesia
  51. PT Reliance Modal Ventura
  52. PT Modal Ventura YCAB
  53. Capital Global Ventura
  54. PT Asia Pasific Ventura
  55. PT Central Capital Ventura
  56. PT Kresna Ventura Kapital
  57. PT PNM Ventura Capital
  58. PT Sarana Bengkulu Ventura
  59. PT Modal Nusantara Ventura
  60. PT Karya Ventura
  61. PT Nasorasudha Mega Ventura
  62. PT Permodalan BMT Ventura
  63. PT PNM Ventura Syariah
  64. PT Amanah Ventura Syariah
  65. PT Persada Ventura Syariah

Buying a VC 

In 2018, the largest state-owned bank, Bank Rakyat Indonesia (BRI), acquired a registered VC Bahana Artha Ventura and rebrands it as BRI Ventures. 

This was done publicly through Indonesia Stock Exchange (IDX) with BRI owning 15,874 shares in BRI Ventures, equal to 97.61% stocks in BRI Ventures, with total transaction amounting to 3.09 billion rupiah (US$ 217,005). 

This action also inspire a fellow state-owned bank, Bank Tabungan Negara (BTN), to acquire 30% shares in PNM Investment Management, a local VC previously owned by other state-owned company, Permodalan Nasional Madani as of April 2019. 

BTN aims to acquire 85% of shares in PNM Investment Management in a three-step acquisition plan to become the majority shareholder in the local VC. 

Time-wise, building a VC takes a substantial amount of time and effort compared to acquiring an existing VC. Time intensive process such as getting PT PMA license, public accountant audited financial statement, and business eligibility statement from home country investment authority make the option to acquire an already licensed VC a more popular option.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at hello@mworks.asia.

 

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