JAKARTA, Indonesia—Nirvana Development, an emerging real estate developer and operator in Indonesia,says an affiliate of Warburg Pincus, will commit $125 million to create a joint venture with the company to build and develop a best-in-class retail platform in Indonesia.

The venture will focus on developing supermarket-anchored shopping malls across second- and third-tier cities in Indonesia to capitalize on the growth potential driven by rapid urbanization, emerging consumption and outsized economic growth in these areas.

"We are excited to partner with Warburg Pincus to further accelerate Nirvana's growth and create one of the leading retail platforms in the country,” said Wilson Effendy, the CEO of Nirvana. “With this plan, we will seek to enhance and expand our retail relationships to further deliver quality service and growth to our tenants and stakeholders. As we seek to scale quickly over the next few years, we look forward to benefiting from the wealth of experience and solid track record of the Warburg Pincus team in building out retail platforms globally and in Asia."

The partnership is expected to expand Nirvana's operations and to benefit from one of the world's fastest growing domestic retail sectors. Nirvana says the Indonesian market is “still vastly underpenetrated across the archipelago.” The venture will be seeded with four operating assets and several pipeline projects, which are currently under development. The long-term vision is to create one of the leading retail platforms in Indonesia with institutional-grade malls in cities with sizable population centers and growing disposable incomes. Warburg Pincus will have the option to invest up to an additional $75 million.

Jeffrey Perlman, managing director of Warburg Pincus, added, "With a rapidly expanding middle class and a nascent modern retail sector outside of Jakarta, there is a meaningful opportunity to contribute to Indonesia's consumption transformation.  We are confident that Nirvana's strong local sector knowledge and operational experience, together with Warburg Pincus' proven ability to assist our partners in realizing their full potential, will enable us to benefit from Indonesia's long-term economic growth and emerging middle class. Under the leadership of Mr. Effendy and his strong management team, the new Venture is poised to become one of the pre-eminent retail platforms in Indonesia."

Subject to shareholder approval and the satisfaction of certain closing conditions, the parties expect the transaction to close at the beginning of the second quarter of 2015.

Nirvana Development Tbk PT, headquartered in Jakarta, is one of the leading property developers in Indonesia. Warburg Pincus, headquartered in New York, has been active in Asia since 1994.