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Hidden Billionaire in Indonesia Reaps Gains From Palm Oil

November 04, 2012

Hidden Indonesian Billionaire Lim Gains From IPO

Lim Hariyanto Wijaya Sarwono, chairman of Harita Group, left, and his wife Rita Indriawati in Jakarta on Jan. 10, 2010. Source: KingFoto/Bumitama Agri Ltd. via Bloomberg

Gains from a share sale of Bumitama Agri (BAL) Ltd., an Indonesian palm oil producer, and the growth of mining in Southeast Asia’s largest economy have made Lim Hariyanto Wijaya Sarwono a billionaire.

The 84-year-old chairman of Harita Group, a closely held conglomerate based in Jakarta, is worth at least $1.8 billion, according to the Bloomberg Billionaires Index. The billionaire and his son, Lim Gunawan Hariyanto, own about 53 percent of Bumitama Agri, whose shares have outpaced other companies that raised at least $50 million in an initial public offering in Singapore this year. Lim had also planned to sell shares in its nickel mining business in the city-state’s stock exchange.

“Driven by demand from Asia and principally China and India, the natural resources boom has created significant wealth both for established ultra-high net worth families already in the natural resources business, as well as for new fortune hunters riding on the commodities boom,” said Noor Quek, previously the head of business development in Southeast Asia at Citigroup Inc.’s private-banking unit, who now runs Singapore- based family office adviser NQ International Pte.

The richest man in Indonesia is Eka Tjipta Widjaja, whose most valuable asset is his family’s 50 percent stake in Golden Agri-Resources Ltd., the world’s second-largest palm oil grower, according to the Bloomberg ranking. The country may surpass Germany and the U.K. by 2030 to be the world’s seventh-largest economy, generating $1.8 trillion in annual sales from agriculture, consumer and energy companies by that year, McKinsey & Co. said in a report in September.

Lim, whose family declined to comment on his net worth, has never appeared on any international wealth ranking.

Chinese Migrants

Lim’s father, Lim Tju King, an immigrant from Fujian province in China, started the family business by opening a grocery store in Indonesia’s East Kalimantan province in 1915. The younger Lim, who has seven children, expanded Harita Group, first by trading timber logs and then venturing into plywood manufacturing in 1983. Harita listed PT Tirta Mahakam Resources (TIRT), which makes plywood products, in Jakarta in 1999. The family owns about 34 percent of Tirta Mahakam through PT Harita Jayaraya.

Lim also formed mining ventures with overseas partners, including gold production in Kelian, in East Kalimantan, with Rio Tinto Plc. (RIO) Harita Jayaraya had a 10 percent stake in gold miner PT Kelian Equatorial Mining, while Rio Tinto owned the remaining 90 percent. They closed the mine, which started operations in 1992, in 2005 as reserves declined.

Coal, Nickel

Harita also set up a venture in 1996 with Thai coal producer Lanna Resources Pcl (LANNA) to develop coal deposits in Indonesia, holding a 35 percent equity in the project.

The company had planned this year to raise at least $250 million in a public offering of its nickel mining business in Singapore, valuing the unit at more than $800 million, according to data compiled by Bloomberg.

The family put its IPO plans on hold as Indonesia prepares to ban raw-metal ore shipments from 2014 while compelling mining companies to build smelters. The government will probably allow some exports beyond that deadline to give more time for processing plants to be built, Deputy Energy and Mineral Resources Minister Rudi Rubiandini said in September. Mining accounts for 12 percent of Indonesia’s gross domestic product.

Indonesia banned exports of 32 types of unprocessed metals, waiving the restriction for companies operating under so-called mining business licenses that are planning to build local refineries. Those shipments are subject to a 20 percent tax. The country wants to boost the value of its commodity shipments to support economic growth.

Palm Oil

Lim started the palm oil business in 1996, when Harita bought its first land bank of 17,500 hectares in Central Kalimantan and started planting two years later. Harita, which sells the tropical oil and palm kernel in Indonesia, reorganized its palm business in 2004 and stepped up its planting program.

IOI Corp., a Malaysian palm oil producer founded by billionaire Lee Shin Cheng, bought a 33 percent stake in the palm oil business from the Lim family in 2007. IOI owns about 31 percent of Bumitama after the IPO, and is its biggest shareholder after the founding family.

Lim’s children are involved in running his businesses. Gunawan, 52, is the chief executive officer of Bumitama and Gunardi Hariyanto Lim, 47, is his deputy.

Bumitama has gained 35 percent since the stock started trading in April, exceeding the 3.2 percent increase in Singapore’s benchmark Straits Times Index. (FSSTI) The company’s IPO was more than 30 times subscribed after attracting investors including Wilmar International Ltd., the world’s biggest palm- oil processor. Billionaire Robert Kuok owns about 28 percent of Wilmar.

Young Trees

Bumitama, which has palm oil plantations mainly in Kalimantan, on Indonesia’s part of Borneo island, expects an increase in output as more of its trees reach “prime producing years,” according to its financial report for the first half of this year. Its trees have an average age of about five years, making it one of the youngest plantations in the industry.

“A significant amount of immature plantations provides Bumitama with a high production growth profile,” Agus Sandianto, a Jakarta-based analyst at Credit Suisse Group AG, said in a report dated Aug. 6.

Bumitama is set to double its crude palm oil production in 2015, from 345,111 metric tons in 2011, he said in the report. The company has a total land bank of about 192,000 hectares, of which 62 percent had been planted as of March. It wants to increase the planted area by about 13,000 hectares annually over the next four years.

Mum Wrong

The company’s shares have resisted the slump in palm oil prices. The commodity, used in products such as biofuels and candy, fell to a three-year low in October as economic slowdowns in China and the Europe curbed demand, pushing reserves in Malaysia to the highest ever. Palm-oil prices are set for a “pronounced recovery” as demand for vegetable oils outpaces consumption, Hamburg-based researcher Oil World said in October.

Around the time of its IPO, the company had advertised on an office building facade by the Raffles Place metro station in Singapore. As if to vindicate the family business’s expansion, the slogan on the billboard said: “Mum was wrong. Slow and steady doesn’t win the race.”

To contact the reporter on this story: Netty Ismail in Singapore at nismail3@bloomberg.net

To contact the editor responsible for this story: Matthew G. Miller at mmiller144@bloomberg.net


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