Indonesia Investment Authority (INA) and Allianz GlobalInvestors (AllianzGI) will aim to deploy up to $200 million annually into hybrid capital solutions opportunities, which serve as customized credit solutions for Indonesian businesses.

The duo said in a statement on Monday that they have entered into a strategic partnership centered on coinvestment opportunities to support Indonesia’s economic growth and development.

This collaboration, formalized through a memorandum of understanding (MoU), aims to create an investment framework that leverages both parties’ expertise and business network to facilitate joint investments through hybrid capital solutions scheme — innovative financing methods that blend various financial instruments to meet diverse investment needs, with a focus on infrastructure and energy transition projects.

According to the statement, particular emphasis will be placed on investments that align with Indonesia’s critical infrastructure needs and support the country’s ongoing energy transition initiatives.

These solutions respond strategically to the burgeoning demand for innovative financing in Indonesia that are not fulfilled by conventional senior bank loans or traditional equity.

By leveraging this investment framework, both parties aim to co-invest jointly in sectors that are aligned with Indonesia’s strategic development, ensuring that investments are managed responsibly based on appropriate terms and structure to achieve optimal risk adjusted returns for both parties.

“This partnership represents a strategic alignment with one of the world’s foremost asset managers based on our stringent screening strategy to leverage AllianzGI’s extensive experience and resources into play alongside INA’s strategic mandates,” said Ridha Wirakusumah, Chief Executive Officer of INA.

“Our joint initiative to deploy hybrid capital solutions is about crafting a robust framework for financial innovation that supports the sustainable expansion of local enterprises,

“Together, we aim to enhance the investment landscape in Indonesia, ensuring each venture not only supports local economic growth but also adheres to stringent optimal risk-adjusted returns,” he added.

Sumit Bhandari, Lead Portfolio Manager of Asia Private Credit at Allianz Global Investors, stated that since establishing their private credit team in 2018, they have steadily expanded their presence across Asia, recognizing the immense potential the region holds for investment opportunities. Indonesia’s growth trajectory, particularly in infrastructure and energy transition, aligns closely with our strategic priorities.

“We are excited to support this partnership, focused on seeking to deliver tailored credit solutions to growing middle market companies, driving sustainable development and contributing to Indonesia’s long-term economic goals,” he added.

It is noted that AllianzGI is a global asset management firm with EUR 555 billion ($620 billion) in assets under management (AUM) as of 30 June 2024, including over EUR 90 billion ($100 billion) allocated to private market assets, of which over EUR 50 billion ($55.82 billion) are infrastructure asset under management (AUM) positioning it as one of the largest global infrastructure investors.

Through this collaborative effort, INA and AllianzGI are committed to developing sustainable investments that aim to provide long-term value and support economic growth in Indonesia.

This partnership demonstrates their joint commitment to leveraging their combined expertise to identify and capitalize on new opportunities in Indonesia, reflecting both their organizations’ strategic goals to positively impact both local and international investment landscapes, said the statement.

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