Indonesia’s Sinarmas Land, a unit of Sinar Mas Group, has increased its stake in Plaza Indonesia Realty as part of a larger initiative to boost its presence in the country’s high-end retail market.
The company, through its subsidiary Paraga Artamida, purchased an additional 297.22 million shares, or 8.4 percent of Plaza Indonesia Realty, for Rp 485.95 billion ($52 million), Ferdinand Sadeli, a director at Sinar Mas Land, said in a filing to the Singapore Stock Exchange late on Monday.
Sinarmas Land purchased the shares for Rp 1,450 apiece. The transaction increases its stake in Plaza Indonesia to 26 percent from 17.6 percent, the statement said.
Plaza Indonesia Realty, a property company, manages the Plaza Indonesia shopping center, The Plaza office tower and the Grand Hyatt Hotel, all in Central Jakarta. Plaza Indonesia Realty also controls entertainment centers like fX and eX in Jakarta.
Sinarmas Land used the group’s cash, which stood at $707.55 million as of the end of the first quarter, to finance the acquisition, the statement said.
“The board [of directors] views the acquisition as beneficial to the group, as it presents an opportunity for the group to increase its stake in Plaza Indonesia Realty,” Ferdinand said in a statement.
The director, who is overseas on a business trip, could not be reached for comment on Tuesday.
Sinarmas Land’s other directors declined to comment on the news.
On a pro-forma basis for 2011, the inclusion of the additional stake in Plaza Indonesia would have boosted its net income to $89.72 million from $88.84 million without the transaction, Sinarmas said in a statement.
Revenue at Sinarmas Land increased 11 percent to S$123.75 million in the first quarter compared to S$111.48 million in the same period a year earlier. Meanwhile, profit dropped by 63 percent to S$6.43 million from a year earlier.
Net income at Plaza Indonesia Realty declined in the first quarter to Rp 40.26 billion from Rp 66.59 billion in the same period a year earlier.
Shares of Plaza Indonesia Realty closed unchanged at Rp 1,450 on the Indonesia Stock Exchange on Tuesday.