Brazil-headquartered JBS, one of the world’s largest meat companies, has announced a joint venture (JV) with Indonesia’s Danantara Investment Management, the investment arm of Indonesia’s sovereign wealth fund, in which the latter will invest US$2.5 billion.
Under the JV agreement, JBS will contribute all of its operations in Australia and New Zealand to the joint venture, while Danantara will invest the funds and receive a 25% stake in the new company.
In addition to the equity investment, the new company is also expected to raise up to US$2.5 billion in additional debt, bringing total funding to as much as US$5 billion.
The funds will be used to finance acquisitions, investments in new plants, including greenfield projects, and other growth initiatives in Indonesia, Australia, New Zealand, and other Southeast Asian markets.
The agreement also provides for the new company to go public through an initial public offering (IPO). If an IPO has not taken place within 6 years of the JV, Danantara will have up to 2 opportunities to exchange all or part of its stake in the joint venture for newly issued JBS shares.
Danantara’s investments will be deployed by phases to be used exclusively to finance new operations and greenfield plants, acquisitions, or investments in new or existing companies in Indonesia’s protein production sector. JBS has identified beef and chicken as 2 main growth categories in the protein segment in this region.
JBS CEO Gilberto Tomazoni said, “Our partnership with Danantara represents an important step in our long-term growth strategy in Southeast Asia. Together with Danantara, we are well-positioned to expand our presence in Indonesia and other Southeast Asian markets, strengthen regional protein supply chains, expand market access, and accelerate the development of Indonesia’s protein sector.”
With rapidly growing middle income urban population, there will be higher consumption of meat and other protein products in this region. Indonesia, especially, is strategically important to the global halal food market. Under the partnership, Australia will remain a ‘central pillar’ of JBS’ geographic diversification strategy and serve as a platform for the company to expand in markets it considers strategic. At the same time, the funds raised will give JBS greater capacity to invest and accelerate growth in the region.
OECD and FAO has projected higher consumption of all protein categories from now till 2034 with Indonesia, Philippines and Vietnam identified as key growth drivers.
