Exclusive: Carlyle taps UBS banker to launch its first Indonesia office

Carlyle Group LP has hired a former UBS banker to launch an Indonesia office, people with direct knowledge of the matter said, becoming the first major private equity firm to set up shop on its own in Southeast Asia's largest economy.

Carlyle has tapped Rajiv Louis, a banker with a decade of dealmaking experience in Indonesia, to be its country head and build up the firm's business across the booming archipelago.

Southeast Asian M&A activity has surged in recent years and burgeoning IPO markets have attracted investors scoping out exit routes. Indonesia has especially piqued private equity interest with its large market and rising middle class.

Players in the sector have moved cautiously, however, as company sizes tend to be smaller, political stability remains a concern, and volatile financial markets are a constant worry.

Carlyle, founded in 1987 by three colleagues and named after the New York hotel where they gathered for early meetings, has gone from a U.S.-focused leveraged buyout firm to a global asset manager with more than $170 billion under management.

The firm, like several of its competitors, is increasingly looking at Indonesia and other fast-growing Southeast Asian markets as fertile ground for Asian deal-making, after focusing much of its early attention on Greater China and North Asia.

Louis, 42, an American who was born in Sri Lanka, left UBS AG earlier this year, the people said. Hired in 2003 by the bank, he was the UBS country head of Indonesia and head of its Indonesian investment banking business prior to his departure. Louis declined to comment for this story.

Washington D.C.-based Carlyle, which has had ownership stakes in such brands as Dunkin' Donuts and Hertz Car Rental, also declined to comment.

DEALMAKING EXPERIENCE

Louis's dealmaking experience, according to people familiar with the matter, includes serving as a key adviser for Carlyle last year on its first investment ever in Southeast Asia: a 25 percent stake in publicly traded Indonesian telecom towers operator PT Solusi Tunas Pratama worth $100 million.

Indonesia's economy and financial markets have surged in recent years, and buyout firms have been drawn to its consumer, natural resources, financial and infrastructure sectors.

The country has a history, however, of extreme volatility and corruption that has kept many foreign investors at bay. Only a few foreign private equity firms have placed bets there.

TPG Capital Management LP has been working with homegrown Indonesian fund Northstar since 2005, and in 2011 the two swapped stakes to cement the relationship.

The goal for the industry is the kind of investment returns that CVC Capital Partners Ltd made on its 2010 investment in PT Matahari Department Store TBK . The firm and PT Multipolar Tbk raised around $1.3 billion by selling 40 percent of their stake in the Indonesian retail giant.

The deal flow in Southeast Asia has grown in recent years, along with the rise in the region's economies and markets.

Completed Southeast Asia M&A deal volume jumped from less than $100 million in the first quarter of 2009 to $1.8 billion in the first quarter of 2013, according to Thomson Reuters data. Over the past two years, M&A volume has reached $113 billion, compared with just $20 billion in the six years before that, the data show.

(Editing by Edmund Klamann)