The Indonesia Investment Authority (INA) may be still young, but it is making strides in the SWF world with a rising AuM and a busy investment activity in Indonesia’s most important industries. We had the great pleasure of speaking with the inaugural Chief Risk Officer of the fund, Ms. Marita Alisjahbana, about the fund’s current state of play and future strategy.
[GSWF] It has been three years since INA’s set up – how do you assess this period?
[INA] In this short time, INA has grown from US$ 5 bn to over US$ 9.3 bn and from 10 to 60 people. We have been challenged by interest rates, geopolitics, etc. – but we feel that these market dislocations have actually strengthened our resilience and we have kept to our core principles. We have built the organization from scratch including governance and strategy, while educating our stakeholders and partners. We continue to attract capital and put it to work in attractive projects, which has helped us build our reputation. We have upcoming presidential elections but aim at sticking to our philosophy and process.
[GSWF] INA aims to grow its AuM to US$ 20 bn – how much of this will be third-party capital? What is your ideal partner?
[INA] Most of this growth will come from third-party investors, both domestic and foreign, and through optimal asset allocation and value creation. Ideally, the INA to co-investor ratio should be 1 to 2 or higher, in order to maximize the FDI into the country. Our ideal partner should bring not only capital but also expertise and technology that can support Indonesia’s sustainable development.
[GSWF] Can you walk us through your various investment schemes? Is INA in charge of finding the investment targets?
[INA] We have three schemes: (i) direct investments and co-investments, e.g., recent deal with Silk Road Fund in Kimia Farma Apotek; (ii) a platform model dedicated to invest in a specific theme, e.g., our JV with ADIA and APG to invest in toll roads; and (iii) a GP-LP scheme that is yet to be put to practice but that could optimize the multiplier on INA’s capital. In general, most of the investments are identified by us, as we have the deal sourcing expertise and visibility – but we are open and are sometimes asked by our partners to join their deals.
[GSWF] Can you remind us of INA’s key industries of interest? Do you expect to invest outside of Indonesia in the future?
[INA] Our primary focus is on Transport & Logistics; Green Energy & Transformation; Digitalization & Digital Infra; and Healthcare; and we have closed deals in all four sectors. There are also other areas such as property or financials that we look at on an opportunistic basis. There is no regulation to prevent us from investing beyond our borders, as long as it contributes to Indonesia’s development.
[GSWF] Around 60% of INA’s portfolio is currently held in treasury assets – is this an ideal balance for INA?
[INA] It is not, and as we mature, we expect to increase our weight in private markets, including real estate and hybrid capital solutions. Given that our focus is domestic and that the Indonesian financial markets are limited, our focus will naturally lean to private capital.
[GSWF] INA recently invested in Pertamina Geothermal along with UAE’s Masdar. How important is Sustainability for INA?
[INA] It is very important given our mandate and double bottom line. Green Energy & Transformation is one of our key pillars and we aim to support the government in its climate goals. Indonesia is blessed with natural resources, including nickel, bauxite, cobalt, and forestry, that can facilitate the energy transition. ESG is also a crucial part of our investment decision and of our portfolio companies’ roadmaps.
[GSWF] What aspects of risk management are most important for a Sovereign Wealth Fund like INA?
[INA] For a fund like INA, risk management is very important and if it is not up to par, we could lose reputation and ability to attract capital. We have adopted the three levels of defense and maintain a comprehensive framework around investment and operational risks.
[GSWF] INA’s workforce is currently 60 staff – is this its optimal size? Do you expect the fund to open any office overseas?
[INA] Indeed, we are now at 60 staff, and 50% of our workforce are under 35, and 50% are women. We would like to stay lean and non-bureaucratic but will keep adding people as we grow. Given our focus is domestic, we do not plan any office overseas for now.
[GSWF] Personally, how do you compare your current role with your time at Citi, and what advice can you give to young Indonesians starting their careers?
[INA] My previous role took me to a number of countries, and enduring losses at the bank provided me with important lessons. The fundamentals of lending vs investing money are not that different, and my experience in Citi prepared me well to be able to help build INA from scratch, both the risk management and the organizational structure.
To young people, I would advise to focus not only on investment but also on risk matters: do not skim over them and do not hide from them; and try to leverage the experiences of people from around you, and the losses they may have endured.
