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Lippo founder: US property looks attractive

Written by Katie Holliday I Reporting by Christine Tan
Thursday, 1 May 2014 | 7:18 PM ET

Lippo: 3 issues that Indonesia needs to solve
Thursday, 1 May 2014 | 6:13 PM ET
Mochtar Riady, Founder and Chairman of Lippo Group, lays out three major problems in the Indonesian economy that he hopes the new government can address.
The founder of major Indonesian conglomerate Lippo Group is eyeing the U.S. property market for its next investment.

Lippo Group, which controls more than $15 billion in assets, recently bought the 72-storey U.S. Bank Tower in Los Angeles for $368 million and launched a second real-estate investment trust (REIT) in Singapore - the Lippo Malls Indonesia Retail Trust - but said it will focus on the U.S. for its next purchase.

"I believe that the U.S. is in the stage of picking up," said founder Mochtar Riady who spoke to CNBC at the Credit Suisse Global Megatrends Conference.

The world's largest economy grew a meager 0.1 percent on year in the first quarter after a severe winter hampered exports and hurt investment spending, but most analysts say it will prove a temporary glitch and the economy is showing signs of a recovery.
"So at this moment, property prices in the U.S. are still considered quite reasonable - so it is a chance to move in," he said, adding that Los Angeles and New York would be their primary areas of focus.
Read More US economy stalls in Q1, inventories and trade weigh
Riady was also optimistic about growth in Indonesia, noting he expects the economy to get a boost following the upcoming presidential elections in July.
Indonesia is one of the fastest growing economies in the world, logging near 6 percent annual growth last year, but has suffered recently after the fallout from tapering by the U.S. Federal Reserve prompted a mass exodus from emerging market assets.
Indonesia's central bank was forced to hike interest rates five times since mid-2013 in an attempt to prop up the currency, which lost 26 percent last year.
The continued impact of Fed tapering, political uncertainty and a controversial mineral export ban are all seen as worry headwinds for the economy.
"After having the elections, you make people more confident about what will be going on in the future," said Riady.
"And so far I think (that) three big political parties have the same concept, same idea, so I believe they will work together and move forward to go in the right direction," he added.
Read MoreWhy Indonesia's parliamentary elections matter
Mochtar Riady, chairman of Lippo Group
Tomohiro Ohsumi | Bloomberg | Getty Images
Mochtar Riady, chairman of Lippo Group
The Indonesian parliamentary elections took place earlier this month, to determine the 560 members of parliament, and parties with at least 25 percent of the popular vote or 20 percent of parliamentary seats are able to field a presidential candidate in July.
The current governor of Jakarta, Joko Widodo, widely known as Jokowi, is believed to be the presidential favorite. But if Jokowa doesn't garner enough votes, he may need to form a coalition with another party, which could limit the ability to push through reforms.
Riady told CNBC he was optimistic that the new leadership would be successful in weeding out in corruption, which has long been a headwind to economic growth in Southeast Asia's largest economy.

Transparency International scores the country at 32 out of 100 on its corruption perception index, with 0 signaling highly corrupt and 100 as very clean, which gives it a ranking of 114 out of 177 countries.
"They're all [all the major candidates] very keen to show off [to] the new generation and have their new ideas to move our nation into the right direction," he added.
Rumors have circulated recently that the Lippo Group conglomerate was in talks with Caesar Entertainment regarding building a casino resort in South Korea, but Riady flat out denied these reports to CNBC.
"We are not interested in the casino business. My father always [taught] me that I have to work hard to [make] money, not [get it] from [a] casino," he said.
Lippo to focus on infrastructure as Indonesia urbanises
Published on May 4, 2014 1:26 AM

Lippo Group founder Mochtar Riady says his secret to being a successful businessmen is to "know I don't know" and hire professionals to do the job. -- PHOTO: CREDIT SUISSE

By Justin Harper

Many decades spent building up a huge property empire - including schools, shopping malls, hospitals and condominiums - meant that Mr Mochtar Riady has had a significant role in shaping Indonesia's urban landscape.

But the founder and chairman of the Lippo Group still has ambitious plans to build more schools, hospitals and residential developments to help cater to the country's urbanisation.

As cities become more crowded and polluted, Lippo's strategy is to build integrated developments on the outskirts of its major cities.

These include residential condominiums, commercial and entertainment areas, office space and health-care facilities.

Lippo has already built an independent township and a satellite city on the outskirts of Jakarta, featuring a green environment and world-class infrastructure.

Dr Riady, 85, first started out in business in 1954, and 60 years on, is still a massively influential figure in Indonesia's nation-building.

He told an enraptured audience last Wednesday at the Credit Suisse Global Megatrends Conference of his plans to build more facilities in his home country and help improve its infrastructure.

Urbanisation has been identified by Credit Suisse as a megatrend - one of the macroeconomic driving forces shaping society and impacting business.

Dr Riady said: "I have the ability so I would like to build more and more hospitals in Indonesia. I have 16 hospitals and I would like to open up to 70 hospitals around Indonesia.

"Secondly, I believe education is one of the most important factors of nation-building. Up to now we have close to 100 schools in remote areas."

"Smart city" technologies using information and communications are predicted by Credit Suisse to increase urban life quality.

These can be employed across a range of services including waste management, transportation, energy and health care.

Such technologies are another area the Lippo Group has been focusing on as it works to improve digital infrastructure across Indonesia, a country with about 200 million mobile phones in use.

Dr Riady said: "The handphone and the smartphone are not different from the computer. They can do anything.

"That means Indonesia is going into the information society stages. We choose to be in the connectivity business. This to us is a natural resource."

The Indonesian billionaire is highly respected in the Asian business community and counts former US president Bill Clinton as a friend.

Lippo is still run as a family business with his sons Stephen and James playing key roles in the company, helping to manage assets worth around US$20 billion (S$25 billion).

Talking about the secret to being a successful businessman, he said: "The secret is to know I don't know. I have to look for professionals to run the business."
OUE seems to be beaten down and undervalued now trading at 2.09
why do u think its undervalued?
whats the price to book ratio like? and hows its gearing level?
As per annc, lippo china resources and Hong Kong Chinese in discussions for
Takeover/RTO. likely minorities get lousy deal.
I see that it's selling for half its book value only, however I can't see how value can be unlock to minority shareholders
unlocked 1st round liao recently, with the stapled shares for OUE Hospitality Reit.
Think the annual report did not account for the listing of OUE H Reit if I am not wrong, so the book value could potentially be much lower.
But I do believe even if this is taken into consideration, it is still well under value.
OUE HT to acquire Crown Plaza from OUE for $495m. A special dividend from OUE soon? Smile
^^ likely the answer is no....I dont trust the Indonesians..

Story on the announcement shared above...

OUE Lippo to subscribe for 2.9b shares in Gemdale Properties and Investment Corp
28 Dec11:29 PM
OUE Lippo Ltd - a subsidiary of mainboard-listed real estate owner, developer and operator OUE Ltd - has entered into a conditional subscription agreement to subscribe for 2.9 billion new ordinary shares in Hong Kong-listed Gemdale Properties and Investment Corporation Ltd (GPI) at an issue price of HK$0.52 per share, amounting to about HK$1.508 billion (S$257 million)
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