Indonesian state telecom said to weigh sale of venture arm managing $830 million

A unit of Indonesia's largest state-owned telecom conglomerate is said to be weighing the sale of an embattled venture capital firm.

TelkomMetra is considering selling MDI Ventures, according to four people familiar with the matter, who requested not to be named discussing private matters. They said the process is still at a preliminary stage and no final decision has been made. TelkomMetra has hired Jefferies to advise on the deal, two of the four people said.

TelkomMetra, a subsidiary of PT Telkom Indonesia (Persero), is "assessing various alternative strategic corporate actions" for MDI Ventures, including a sale, according to a letter issued by MDI and seen by CNBC. The letter, sent to at least one company in TelkomMetra's portfolio early this month, requested stakeholders' opinions on the proposed process by July 17.

In an emailed statement to CNBC, a representative for MDI Ventures said that "at this time, we are not in a position to comment on or disclose any information regarding the matters." Jefferies declined to comment, and TelkomMetra did not respond to CNBC's requests for comment.

With $830 million in total committed assets under management, MDI Ventures is one of the largest corporate venture capital firms in Indonesia. Its funds also manage capital from institutional investors in South Korea, Singapore, and Norway, according to PitchBook.

Indonesian tech companies are in a multiyear funding drought, with capital raised falling to $213 million in 2025, down 38% from a year earlier and 85% below the 2023 level, according to Tracxn.

MDI has also been one of Indonesia's most active state-backed technology investors with a portfolio of more than 80 companies, including six unicorns — companies that hit or exceed $1 billion in valuation — such as Kredivo, a Jakarta-based digital credit platform, and Nium, a payment system services provider co-headquartered in San Francisco and Singapore.

The possible sale follows a corruption verdict against two of its former executives over their investments in agritech startup TaniHub Group, that later collapsed. The case has put under spotlight Indonesia's anti-corruption laws, where prosecutors could pursue criminal cases against executives over alleged losses to state finances.

TelkomMetra has also sought to shrink its sprawling portfolio this year. Local media reported earlier this year that Danantara Indonesia, the country's sovereign wealth fund that oversees state companies, had months ago asked Telkom Indonesia (Persero) to cut 10 subsidiaries by the end of June, out of more than 60. CNBC could not independently verify that report. Danantara didn't respond to a request for comment.

A Jakarta court in June found four former executives of MDI Ventures and BRI Ventures, backed by state-owned Bank Rakyat Indonesia, guilty under the country's anti-corruption law in connection with a $25 million joint investment in TaniHub.

Indonesian prosecutors argued that the defendants failed to properly validate data provided by the startup, and their mismanagement of the fund had led to state financial losses. The four people involved were sentenced to prison terms of two to five years each.

Lawyers for the executives argued the investment had followed established governance procedures and due diligence, and approval by the firms' authorized decision-making bodies. The convictions failed to factor in the nature of venture investing, where startups often lack operating history and audited accounts, they said.

At least three of the four defendants were reportedly considering appeals.

TaniHub, founded in 2016, linked Indonesian farmers to buyers through an e-commerce platform and extended agricultural credit through a peer-to-peer lending unit, called TaniFund. The startup had raised funds from backers that also included Vertex Ventures, the venture-capital arm of Singapore state investor Temasek Holdings.

TaniFund was liquidated and ceased operations in 2024 after it recorded a non-performing loan ratio of as much as 30% in 2023, and failed to meet minimum equity requirements.

Under Indonesia's "state loss" doctrine, a bad commercial bet at such entities may become a criminal matter. Capital deployed by state-controlled companies is treated as public money — thus prosecutors can treat a soured investment as a loss to state finances, exposing the executives behind it to criminal charges.

A Jakarta court last month sentenced Nadiem Makarim, a co-founder of the ride-hailing app Gojek, to 10 years in prison for abusing his authority as education minister, in a case linked to the procurement of Chromebook laptops from Google. The court argued that the purchases incurred around $120 million in losses to the state.

Makarim has denied wrongdoing, and his legal team has filed an appeal with the Jakarta High Court, alleging the Jakarta corruption court judges disregarded evidence presented during the trial. Google also denied offering any benefit in exchange for the ministry's decision.

Former Indonesian trade minister Tom Lembong was convicted and sentenced to 4.5 years in prison for improperly granting import permits for raw sugar that allegedly caused state losses, before being freed last year.

"State losses threaten to become a major bottleneck for Indonesia's development," said Bert Hofman, a visiting senior fellow at think-tank CSIS Indonesia, who helped the Indonesian government formulate its anti-corruption law during his stint at the World Bank.

"Investors would shy away from dealings with government or state-owned entities ... talented people would hesitate to join government because of the risk involved, and bureaucrats would avoid taking decisions as they may be held responsible for potential future state losses," Hofman added.