The M&A Landscape 2026: Strategic Consolidation in the Prabowo Era
With Danantara's creation and regulatory shifts under the new administration, Indonesia's M&A market is experiencing a wave of strategic consolidation. Foreign direct investment remains strong at 5.03% GDP growth.
Indonesia's mergers and acquisitions landscape is undergoing a fundamental transformation. Following the transition to the Prabowo Subianto administration, the creation of Danantara—Indonesia's sovereign wealth fund—and regulatory adjustments are reshaping how domestic and foreign capital approaches the market.
The telecommunications sector exemplifies this trend. The merger between PT Smartfren Telecom Tbk and PT XL Axiata Tbk, expected to complete in the first half of 2026, represents a strategic consolidation where Sinar Mas and Axiata Group will jointly control the surviving entity. As Franky Widjaja noted, the primary benefit is reducing redundant services, lowering expenses, and improving service quality—a pattern we're seeing across multiple sectors.
Foreign direct investment (FDI) in infrastructure and energy transition projects has surged, supported by Indonesia's consistent economic growth at approximately 5% annually. The government's ambitious target of 8% GDP growth by the end of the current term includes tax incentives and regulatory easing to attract strategic investors.
Valuation trends show a distinct premium being placed on assets with clear ESG compliance. Companies with robust sustainability practices command 15-20% higher multiples compared to peers. For mid-market firms preparing for exit or partnership, financial due diligence that highlights ESG metrics is now baseline, not optional.
Key sectors driving M&A activity include renewable energy, particularly solar and geothermal; downstream mineral processing aligned with the government's nickel and EV battery ecosystem strategy; and logistics infrastructure to support the expanding e-commerce sector.
However, challenges persist. The Rupiah's volatility in 2025, underperforming most Asian currencies, has complicated cross-border transactions. Foreign investors posted outflows of Rp110.11 trillion from SRBI, Rp17.00 trillion from equity, and Rp2.01 trillion from bonds. This capital flight underscores the importance of structuring deals with currency hedging and local partnership components.
At SandyaKala & Company, our valuation teams are observing a shift from pure market-share acquisitions toward capability-driven synergies. Strategic buyers are seeking targets with complementary technologies, established distribution networks, or specialized talent pools. For sellers, preparation means demonstrating not just financial performance, but strategic value in a rapidly consolidating market.