Metro Pacific Tollways Poised to Acquire MajorStake, Operatorin Indonesia's Trans-Java Toll

Metro Pacific Tollways Corp. Metro Pacific Tollways Corp. (MPTC) is on the cusp of a significant international expansion as it nears the acquisition of a 35% stake in Indonesia's PT Jasamarga Transjawa Tol (JTI), the operator of a vital 676-kilometer portion of the Trans-Java Toll. The deal, expected to close by July or August 2024, will mark MPTC's largest project outside the Philippines, outvaluing its domestic network once awarded.

Why this matters: This acquisition highlights the growing importance of infrastructure development in Southeast Asia, where countries are investing heavily in transportation networks to drive economic growth. As MPTC expands its presence in Indonesia, it sets a precedent for other regional players to follow, potentially shaping the future of infrastructure development in the region.

The Trans-Java Toll, a vital transportation artery in Indonesia, services around 900,000 vehicles daily across its 13 toll sections. JTI's concessions have an average remaining life of 35 years. MPTC, in partnership with Singapore's sovereign wealth fund GIC Pte. Ltd., is currently negotiating the terms of the concession. Rogelio Singson, MPTC president and CEO, stated, "We are just waiting for the final government decision that our group, together with some foreign partners, will be awarded." New, Road

The estimated value of the 35% stake ranges between $1 billion and $1.5 billion. MPTC's Indonesian subsidiary will acquire 20.3% of the stake, while GIC will own 10.3%, and MPTC-led PT Margautama Nusantara will take the remaining 4.2%. GIC recently invested in MPTC's toll road unit in Indonesia, acquiring a 33% share, further solidifying the partnership between the two entities.

MPTC's expansion into Indonesia highlights the difference in toll road development compared to the Philippines. Christopher Daniel Lizo, MPTC chief finance officer, explained,"The government takes care of the construction of expressways and sells their ownership to the private sector once finished. "This approach reduces capital risks for private companies, unlike in the Philippines, where tollway developers often face additional costs resulting from delays in acquiring right of way."

In addition to the JTI acquisition, MPTC has also secured a new concession project in Indonesia involving a 21.5-kilometer elevated toll road worth $1.4 billion. The project is set to commence this month and will be completed by January 2028, with a concession life of 45 years. This new project further cements MPTC's commitment to expanding its presence in the Indonesian market.

MPTC's aggressive international expansion comes amid talks of a potential consolidation with San Miguel Corp.'s toll road unit in the Philippines. Businessmen Manuel V. Pangilinan of MPTC and Ramon Ang of San Miguel Corp. are exploring the possibility of creating an infrastructure giant that will be listed on the Philippine Stock Exchange. However, it remains unclear whether MPTC's Indonesian projects will be included in the joint venture because of their cost and size.

As MPTC continues to traverse the complex terrain of international toll road development, its successful acquisition of a significant stake in Indonesia's Trans-Java Toll marks a major milestone in the company's growth strategy. With a strong foothold in the Indonesian market and a proven track record in the Philippines, MPTC is well-positioned to capitalize on the growing demand for infrastructure in Southeast Asia.

Key Takeaways

• MPTC to acquire 35% stake in Indonesia's PT Jasamarga Transjawa Tol (JTI) for $1-1.5 billion.
• JTI operates 676-km Trans-Java Toll, servicing 900,000 vehicles daily with 35-year concession life.
• MPTC's Indonesian subsidiary to acquire 20.3% stake, GIC 10.3%, and PT Margautama Nusantara 4.2%.
• MPTC secures new $1.4 billion concession project in Indonesia, a 21.5-km elevated toll road.
• MPTC's expansion marks a significant milestone in its growth strategy, capitalizing on Southeast Asia's infrastructure demand.