Venture capital firm sows the seeds of enterprise
INVESTMENT BANKING IS CARRIED OUT WITH INTEGRITY AND EXPERIENCE BY NATIONAL GIANT

Steered by state-owned companies like Bahana Pembinaan Usaha Indonesia (BPUI), venture capital and investment banking markets have come of age during the past decade.
The BPUI group, which was created in 1973 to provide finance to help develop small and medium-sized companies, has played a central role in developing Indonesia’s capital markets and has become one of the largest securities companies in the country.

IGNASIUS JONAN President and Chief Executive Officer of Bahana Securities

BPUI is divided into three subsidiaries: Bahana Artha Ventura, a venture capital company; Bahana Securities, one of the most profitable domestic securities houses and investment banks in Indonesia; and Bahana TCW Investment Management, a joint venture with Trust Company of the West, a leading fund manager based in the US. BPUI has a 60 percent interest in the joint venture, which was launched in 1995.
While the group expanded into securities and asset management in the early 1990s, it is now refocusing on its original core business of promoting smaller companies, says BPUI President and Chief Executive Officer Ignasius Jonan. At the same time, it has played an active part in the government’s efforts to increase foreign interest in Indonesia, as well as the privatization of state-owned companies.

AS MONAS is the national landmark in Jakarta, Bahana is the landmark for financial services in Indonesia.

“We have been trying to increase investment opportunities, especially for our foreign clients,” says Mr. Jonan. “We have been in the market serving foreign investors for about four or five years, and we have a very solid track record. All the big privatization transactions since 1995-96 have involved us.”
Mr. Jonan emphasizes the need for plain dealing with investors. “I would be very proud if Bahana was perceived as a company with a lot of experience and integrity,” he says. “Those are the two main things we offer. We believe we have distinctive inside knowledge of Indonesia.”

The Bahana group has a staff of about 400 advisors to provide advice and assistance. “It might seem that we have fewer people than some other players in the market, but in terms of staff we focus on quality and performance, not quantity,” he says. “In terms of labor force, size doesn’t matter.”
Bahana Artha Ventura, the venture capital arm of the group, has expanded rapidly since BPUI was reorganized in 1994. Until then, the company was highly centralized with just one office in the capital, Jakarta, covering the entire country. That has all changed in favor of a more hands-on approach, based on closer links with local interests.
“We have established offices in provinces all over Indonesia,” says Bahana Artha Ventura President Director Andre Rahendrawan. “At present, we have 27 offices and we completed our relocation in 1996.”

The company concentrates on small projects requiring initial financing of up to $200,000, ranging from a collective formed by 300 tobacco farmers to a manufacturer of school uniforms that employs 600 workers.
Bahana Artha Ventura also tries to encourage foreign firms to support its projects. For instance, oil giant BP is providing around $2 million in capital to help a project in a fishing village in Papua.
At the moment they have 7,500 such projects on the books, providing jobs for about 600,000 people. Most of the projects are financed for an initial period of three years. The company also works in cooperation with non-government organizations (NGOs) specializing in development programs.

Bahana Artha Ventura is always encouraging its clients – and its own staff – to adopt a business-like attitude toward their enterprises. “We don’t want them to think that we are giving charity,” says President Commissioner and Chief Executive Officer Hendi Kariawan. Rather than charity, he sees financial assistance as a form of “endowment funds for productive purposes”.
The aim, he explains, is to provide seed capital, which must eventually be returned. The hope is to encourage other potential entrepreneurs to go into business. “If they see that their peers are a success after being
financed and helped by us, then they may well become interested in setting up their own company or project.”