SINGAPORE (Mar 13): Indonesia’s Lippo Group sees no “more hiccups” in its flagship US$18 billion ($24.4 billion) township project near Jakarta as a new fundraising plan helps alleviate liquidity concerns.

The Meikarta project, touted as the “Shenzhen of Indonesia” and backed by the Riady family, will be completed before its deadline, said John Riady (main image), the newly appointed chief executive officer of PT Lippo Karawaci. A US$1 billion fundraising plan by Lippo Karawaci, which indirectly owns the majority of the project, will address the funding issues, he said.

The future of Lippo group’s most ambitious project was in limbo last year after Indonesian anti-corruption agency arrested company executives and several government officials in a bribery probe related to approvals for the township. A court last week sentenced Lippo Group executive Billy Sindoro to three-and-a-half years in prison and fined him 100 million rupiah ($9,496) for bribing officials, while three other Lippo employees were found guilty, CNN Indonesia reported.

See: Arrests leave one of Southeast Asia's biggest projects in limbo

See also: Lippo Karawaci says Fitch credit downgrade 'regretted'; fund-raising progressing smoothly

“I don’t think people should expect more hiccups” on Meikarta,” Riady, the grandson of group founder Mochtar Riady, said in an interview in Jakarta on Tuesday. “What I can say is that we have to regain the confidence and trust. What we must do is we must complete the project.”

Largest Undertaking
The planned 278 trillion-rupiah development, covering 22 sqkm of the Bekasi-Cikarang district on the outskirts of Jakarta, is the largest undertaking in Lippo’s 68-year history. The group has said the project will be jointly funded by partners such as Mitsubishi Corp, Toyota Motor Corp and Sanko Soflan Holdings.

While the corruption probe and questioning of group Vice Chairman James Riady by investigators hurt demand for under-construction units, sales of finished units never slowed down, Riady said. The group is working to get banks to lend to the project again, he said.

The project by PT Lippo Cikarang’s unit PT Mahkota Sentosa Utama has already completed several residential towers and pre-sold thousands of units. Lippo Karawaci will invest as much as US$200 million to develop Meikarta township by subscribing to its 54.4% entitlement in a planned US$200 million rights issue by Cikarang, it said on Tuesday.

See: Lippo Karawaci secures US$1.01 bil for recapitalisation; sells mall to LMIRT

The group plans to focus on urban housing, shopping malls and healthcare services from now, Riady said. “For our family, this is clearly our core business -- healthcare and real estate. It’s not that all the other stuff are bad but I believe these are three areas that will give us the scale and the returns.”

The restructuring should improve investor confidence and “the company’s brand image for its buyers,” Felicia Asrinanda Barus, an analyst at Citigroup Inc., wrote in a report. Shares of Lippo Karawaci gained as much as 2.4% on Wednesday while Lippo Cikarang advanced as much as 1.5%.

Lippo Group wants to transform Lippo Karawaci to “a strong dividend-paying company, driven by asset-light cash flow,” Riady said. The company won’t invest in buying more land as it already has a land bank to support its expansion, he said.

PT Siloam International Hospitals will focus only “very compelling” assets, Riady said. The company on Tuesday said it would divest its stake in two hospital joint ventures in Myanmar.