Peter Sondakh, the Rajawali Group chairman and chief executive officer, has set his sight on making his company a global giant in the palm oil business and sees PNG as the game changer for the industry.
Tycoon wants to make Indonesia global player in food supply
Peter Sondakh, the Indonesian billionaire, made his fame and fortune turning around sickly state-owned enterprises into hugely profitable companies.
He launched in 1986 Indonesia's first private television company and rolled out Asia's first prepaid telecommunication services in 1997 — at the onset of the Asian financial crisis.
He rescued a cigarette maker from the brink of bankruptcy and made Semen Gresik — now Semen Indonesia — the number one player in the country's cement industry.
Now, the Rajawali Group chairman and chief executive officer has set his sight on making his company a global giant in the palm oil business.
His game plan may even help Felda Global Ventures Holdings (FGV) reverse its own waning fortune.
"I am hoping that FGV will make a lot of money from this deal," he told StarBiz at his office in central Jakarta's business district recently.
He talks about the potential synergy between the two companies. Rajawali's Eagle High Plantations Tbk has a lot of land, 425,000 hectares, scattered across Indonesia, while FGV had the experience in the downstream side of the business.
"If not in Indonesia where else can it (FGV) grow?" Sondakh asked.
He also dismissed claims that proceeds from the exercise — FGV is paying close to 2.8 billion ringgit (US$740.4 million) for a stake in Rajawali's plantation business — will be used to purchase assets from 1Malaysia Development Bhd (1MDB) projects.
"I am not investing in new property projects in Malaysia. Maybe in other things, but not property," he said.
His focus is to build in Indonesia.
In Jakarta, near its headquarters, the Rajawali Group is completing work on its latest luxury hotel — the St Regis Jakarta — which is scheduled to open next year.
Sondakh is ranked sixth richest in Indonesia by Forbes with an estimated net worth of US$2.3 billion.
That gave him a lot of clout in a region where business and politics often mix.
"I always work with an institution in my joint ventures," he said.
FGV on June 12 announced it had entered into heads of agreement with Sondakh's Rajawali group to acquire a 37 percent stake in PT Eagle High plantations Tbk for US$680 million.
It is also buying Rajawali's sugar cane plantation for US$67 million.
Eagle High has a total land bank of 425,000 hectares — in Kalimantan, Papua New Guinea (PNG) and Sulawesi. About 160,000 hectares of its land had been planted.
Sondakh sees PNG as the game changer for the industry.
It's huge land mass and proximity to China — the biggest market for palm oil products — makes the area the hottest plantation spot for global players.
Sime Darby Bhd in October last year bought New Britain Palm Oil Ltd, which has 135,000 hectares of plantation land in PNG for US$1.74 billion.
It was a missed opportunity for FGV.
The company, which had seen its profits tumbling in recent quarters, said the partnership with Rajawali will transform the company into one of the world's largest fully integrated oil palm plantation companies.
Sondakh said he had met President Joko "Jokowi" Widodo over the deal with FGV, and he said the president was keen on the tie-up as an opportunity to improve the living standards of more than 2 million Indonesia farmers.
Sondakh's close relationship with the top office in Indonesia goes back a long way since the days of Sukarno.
"I know Megawati Sukarnoputri since we were younger," he said. Megawati was Indonesia's fourth president and a daughter of Sukarno.
Sondakh came from a family that had been in the commodity business since the 1960s.
They were first in the coconut business, which Sondakh took over in 1984.