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How Erick Thohir Bought Inter Milan
LA Gazetta dello Sport, an Italian sport newspaper, put the photo of Erick Thohir in the front page of its 15 October 2013 edition with headline “Indo-Inter”. On that photo, Erick was smiling widely while showing off his Inter Milan shirt. Yes, the 43-year-old Indonesian businessman had just oficially becoming a major shareholder of Inter Milan. Erick and his two partners, Rosan Roeslani and Handy Soetedjo, acquired 70% of the club’s shares, while the rest 30% shares still owned by former major shareholder Massimo Moratti. Although Erick and co are the majority shareholders, but the operation of the club is still in the hand of Moratti, which own the famous Italian tires company Pirelli.
News of Erick’s plan to buy Inter Milan shares have spread since a few months ago. When encountered while opening a youth basketball tournament in Jakarta early October 2013, Erick have confirmed his plan to Indonesian media. “Yes. It is clear, I have said in several media that I do have plan to buy Inter Milan. I have a football club in the US, but not yet in Europe. I do want to have a Europe-based football club,” he explained.
But, Erick was not ready to revealed the value of the transaction at the time. “I don’t want to reveal the value of the transaction,” said Erick. According to information cited by the media, including Reuters, Erick spend around US$476 million or Rp5.38 trillion. Another version of the deal was Erick and Co. spend around 350 million euro or about Rp5.4 trillion. One thing for sure, when the deal between Erick and Moratti agreed, both are satisfied with it. “Today is a very special day for me,” said Erick who commonly called ‘Mas Eto’ by his colleagues. While Moratti are sure that Erick is a man with good intention, have a wise character, and can be relied on for the progress of Inter Milan in the future.
Erick’s satisfaction is understandable, because he is the first Indonesian businessman to lead a consortium and succeeding in becoming an owner of a prestigious club in Europe and Italy. As a businessman, Eric Thohir is quite well known in Indonesia, especially as a young entrepreneur who devoted himself to basketball. His love of the sport started when he study in the US during the ‘90s.
Erick is the son of Teddy Thohir (co owner Grup Astra which build by late William Soeryadjaya). His older brother, Garibaldi “Boy” Thohir, is a successful businessman who is a majority shareholder of Adaro. Erick himself is the boss of PT Mahaka Media Tbk, a company which engaged in the field of mass media, with media such as Republika daily, Parents Indonesia magazine, Golf Digest magazine, Jak TV (with Tomy Winata, Artha Graha Group), Prambors radio, Delta FM, and many more under its helm. Erick is also a minority sharholder of TVOne which owned by Bakrie Grup.
The father-of-four who holds master degree in economics started his business empire by establishing restaurants such as Hanamasa and Pronto in 1993-1998. In media business, Erick develop two companies, Mahaka Media and Alif. Mahaka Group was started in 1993. In 2001, Erick bought Republika newspaper. He then bought other print medias, and also tv stasion. Erick is then known as one of the media mogul in Indonesia.
Outside media and sports, Erick’s other businesses is not well recorded. While his business in Mahaka Group, under the name of PT Mahaka Media Tbk, is not too special. According to the company’s financial report in 2012, Mahaka Media, which holds emiten code ABBA in the stock exchange, didn’t register exceptional figures. In 2012, Mahaka post a total revenue of Rp 265 billion with net profit only Rp 4 billion. In 2013, Mahaka Media set operational revenue of Rp 308 billion with net profit to reach Rp 10 billion.
In June 2013, ABBA stock value to parent entity was down 14.29% from Rp 1.47 to Rp 1.26 per share. In the beginning of the year, ABBA share were able to reach Rp 123 or the highest ever reach by the stock. But, after the Inter Milan acquisition, ABBA share only up by 7 poin (+8.24%) and the value is now Rp 92 per share.
With the reported net profit, it can be said that the financial performance of Mahaka Media is not too special. The case is also the same with Erick’s other businesses such as PT Visi Media Asia Tbk (Viva Group). The parent company of TVOne, ANTV, and Vivanews only registering around Rp 27.8 billion in profit in first semester of 2013. Last October, the companies were collateralized to gain loan in the amount of US$ 100 million, which US$ 80 million of it used to pay debt to Deutsche Bank and the rest used for expansion. In Viva Group, Erick is only a minor shareholder (4.1%), while most of the share own by Bakrie Group.
With not so prestigious financial condition, it is natural that some might question how can Erick Thohir accumulate enough resources to acquire Inter Milan. Because it is impossible for the man who was born in 30 May 1970 to only rely on his media companies’ revenues to buy the club. Especially with the fact that it is well known in Indonesia, that the media business is not a business that is very profitable.
But don’t get to conclusion too fast and underestimate Erick Thohir. Outside Mahaka, Erick’s finance is also supported by Tri Nugraha Thohir (TNT) Group, a prominent company which established by Teddy Thohir. TNT engaged in the business of real estate (such as Amaris Hotel Bogor and Taman Laguna), restaurants (Hanamasa and Yakun Kaya Toast), energy (Adaro and Surya Eka Perkasa), financial (WOM Finance), and communication (Tri).
In 2012 TNT Grup was placed 35 in 100 biggest business group in Indonesia on a survey by a reputable Indonesian business magazine. The asset value of TNT is believed to reach US$ 1.2 billion and this placed the Thohir in rank 15 of richest people in Indonesia by Forbes magazine. With a background such as that, of course buying Inter Milan shares is not a problem for Erick Thohir.
Even so, a couple of days after the Inter Milan acquisition, Garibaldi Thohir said to the media that the acquisition was not done on behalf of TNT Group. “the purchase is not done on behalf of our family’s company (TNT Group), but under his own name,” said Garibaldi.
ROSAN AND HANDY
Then, how about Erick’s partners in buying Inter, Rosan Roeslani and Handy Soetedjo? If Erick is a media mogul and sport businessmanm, Rosan Roeslani is more into investment and energy business. With Sandiaga Uno and Elvin Ramli, Rosan is the owner and founder of Recapital Advisors, a fast growing investment group in Indonesia.
Recapital’s growth progress rapidly after the monetary crisis in 1998, where at the time Recapital succesfully handle the restructuration of a number of major companies. Recapital owned three business unit, which is financial, industrial, and other subsidiaries such as Bank Pundi, Bank Ekonomi, and Aetra mineral water distribution company.
With a long-term experience in investment management, in 2008, Recapital Asset Management, a business unit of Recapital Advisors, was trusted by PT Bumi Resources Tbk (BUMI) to manage fund in the amount of US$ 350 million. But until today, the investment haven’t been returned by Recapital. Instead of returning the fund, Recapital offered its shares to BUMI to replace the amount of money invested in Recapital.
This problem have made Rothschild question the source of Rosan’s fund to buy Inter Milan. His obligation to BUMI is unfinished, but yet Roslan can buy Inter. It’s not known precisely what is the value of Rosan’s wealth. But, for certain, there are about 20 companies under Recapital, with total number of employee reach 12,000 people.
Outside Recapital, Rosan also served as commisioner of several companies, such as PT Visi Media Asia Tbk, Saratoga Investama Sedaya, and Mahaka Media Tbk. Rosan is also Founder and Chairman Amanah Recapital and Chairman of Yayasan Losari. Compared to Erick, Rosan is not too well known widely. His name surfaced after the problem between BUMI shareholders arise and the acquisition of Inter being done. In Recapital, Rosan’s name is less famous than his partner Sandiaga Uno.
The same goes with Handy Soetedjo. The businessman who also loves basketball, just like Eric Thohir, is also known as a man who prefer to stay away from the spotlight. Handy is the boss of PT Midasia Capital, an investment company which engaged in coal, oil and gas, real estate, and several media companies. If the purchase value and the composition of Inter Milan shares is according to the circulating news, then from the Rp 4 trillion spend by the trio, Erick spend Rp 1.4 trillion, (35%), Rosan Rp 1.3 trillion (32.5%), and Handy Rp 1.3 trillion (32.5%).
There is a strong friendship between Erick, Rosan, and Handy, that have been developed since the three went to college in the US in the ‘90s. After returning to Indonesia, they went separate ways. Erick joined the family business, Rosan become a banker, and Handy worked in a company.
Erick and Handy had similar hobbies: playing basketball. They often played together in Kelapa Gading Sport Centre or Senayan. In the 2000s, when Indonesia economy started to rise, the three met again and talked about busines more intensely. By Erick’s initiative, the three friends then build Mahaka Media which in 2001 acquired Republika.
To this moment, they still have shares in Mahaka Media with the largest portion of shares own by Erick. The three friends considered as a perfect blend of three business intuition. Erick is good in selling, Rosan is good in finding market, while Handy is good at calculating. And now, they officially the major shareholders of Inter. And Erick said that the acquisition is purely business. “Well of course. I’m Erick Thohir. You know, it’s not Erick Thohir if it’s not business,” he said with a Betawi dialect.
That means, the step taken by Erick and Co is a form of investment. Nowadays, Inter Milan is entangled in financial issues and facing difficulties to buy new good players. But, Erick is sure that in the future the club will be back in its winning ways. When that happens, they can sell their shares on Inter Milan just like Thaksin sold Manchester City, with a much higher price.
“Investment in sports business is a long term investment. It’s not we buy today then gain profit tomorrow. There is long term plan, targets to fulfill. I’m sure everything will worth it,” said Erick. Well, at least history will record that there were three young Indonesian entrepreneur who owned world-class football club.