Chapter 3

Figures converted from Indonesian rupiah at historical FX rates — see data/company.json.fx_rates. Ratios, margins, and multiples are unitless and unchanged.

What sits under the net asset value

Saratoga's net asset value is, in practice, four positions: a tower operator, a copper-gold-nickel miner, the two halves of the former Adaro coal group, and a motorcycle distributor. Their combined mark was $2,936 million at the end of 2025 against $3,710 million four years earlier, while everything else in the portfolio grew from $476 million to $711 million. A 10% move in those share prices changes reported equity by $277 million in the audited accounts.

The four are held in different ways, and only one of them is held directly in full. Merdeka Copper Gold is a straight 19.37% registered holding. Tower Bersama is 31.61%, of which only 9.37% is held through a wholly-owned subsidiary — the remaining 22.25% comes through Bersama Digital Infrastructure Asia, a Singapore company in which Saratoga holds 27.38% and which also owns assets other than towers [1]. The coal exposure is spread across four line items: 4.00% of Alamtri held directly, 4.38% of Adaro Andalan held directly, and 25.00% and 29.79% stakes in two associates, Adaro Strategic Capital and Adaro Strategic Lestari, whose fair value the notes describe as "mainly" representing indirect interests in the same two coal companies [2]. Mitra Pinasthika Mustika is 57.7% owned and still carried at its quoted price rather than consolidated [3].

Sources: valuations and effective ownership from the FY2025 Annual Report net asset valuation table [4]; business descriptions from the 2025 Portfolio Highlights [5], [6], [7], with Mitra Pinasthika Mustika's Honda distribution rights and JACCS MPM Finance stake from the FY2022 Annual Report [8].

Operationally, these are unlike each other in almost every respect that matters. Tower Bersama sells space on more than 24,300 telecommunication sites and distributed antenna networks under long-term contracts [9]; at the end of 2024 it carried over 42,000 tenants across nearly 24,000 sites [10]. Merdeka's economics are set at the mine gate: in 2024 the Tujuh Bukit gold mine produced 115,867 ounces at an all-in sustaining cost of $1,337 per ounce against an average selling price of $2,371, Wetar produced 13,902 tonnes of copper, and Merdeka Battery Materials produced 82,161 tonnes of nickel pig iron and 50,315 tonnes of high-grade nickel matte [11]. Alamtri's forward case rests on a smelter: ADMR's aluminium plant was scheduled to begin operating in December 2025 at 500,000 tonnes a year, with planned expansion to 1.5 million tonnes [12]. Adaro Andalan is the thermal coal half of the old group, described by Saratoga as navigating "a normalizing global pricing environment" by growing volumes [13]. A contracted lease book, a mine, a smelter project and a coal seam do not respond to the same variables, and the record of the last five years shows it.

Four years of marks that ended where they started

Saratoga publishes each holding's mark every year, so the trajectory is checkable rather than inferred.

Source: net asset valuation tables in the FY2021 [14], FY2022 [15], FY2023 [16], FY2024 [17] and FY2025 [18] Annual Reports; coal is Adaro Energy Indonesia, renamed Alamtri Resources, plus Adaro Andalan from 2024.

Added together, the four were worth $3,710 million at the end of 2021 and $2,936 million at the end of 2025 — 7.7% lower after four years in rupiah terms. Tower Bersama was marked at $1,120 million against $1,602 million; Merdeka at $648 million against $1,141 million; the coal holdings, taken together across the 2024 separation, at $1,021 million against $765 million. The rest of the portfolio moved the other way, from $476 million to $711 million. But that increase is largely bought rather than compounded: Saratoga deployed $140 million of cash into investments in 2023 [19] and $358 million and $166 million in 2024 and 2025 [20] — $664 million in three years, part of which went into the four core names as well. Neither number is a return.

Two of the moves need qualifying rather than reading straight. Tower Bersama's 2022 fall from $1,602 million to $931 million is roughly half price and half structure: the share price went from $0.207 to $0.150, but effective ownership also dropped from 34.2% to 26.7% in the Bersama Digital restructuring, before recovering to 31.5% in 2023 [21], [22]. And the 2024 jump in the coal line reflects the separation of Adaro Andalan from Alamtri, not a doubling of the underlying business.

The choice of starting year does most of the work in any judgment here, and it should be stated rather than buried. Measured from the end of 2020, the same portfolio went from $2,416 million to $3,646 million, and net asset value per share from $0.164 to $0.267 [23]. Measured from the end of 2021, after the commodity surge had already been captured, net asset value per share rose 7.0% over four years in rupiah terms, before the $0.015 per share of dividends paid in the same window [24], [25], [26]. On the company's own disclosed Bank Indonesia mid rates, the rupiah went from 14,269 to the dollar at the end of 2021 to 16,782 at the end of 2025, so in dollar terms that per-share net asset value is 9.0% lower than it was four years ago [27], [28].

The operating line beneath the marks tells the same cyclical story. Saratoga's own investor presentation tracks the aggregate revenue of its listed portfolio: $1,218 million in 2018, rising to $3,779 million in 2022, then falling to $2,907 million in 2023 [29]. The 2021 peak in the marks was a coal price event before it was anything else — Newcastle thermal coal went from $80 a tonne at the start of 2021 to $150 by year-end, touching more than $200 in the third quarter [30].

Source: Saratoga investor presentation, January 2025 [31]. The presentation also shows a nine-month 2024 figure of $3,106 million, which is not comparable to the full years and is excluded here.

The internal offset and its limits

Whether the portfolio's parts hedge each other is answerable from the year-by-year changes rather than from any statement management makes.

Source: FY2025 Annual Report, net asset valuation table [32]. The five components sum to the reported $307 million increase in the sum of investee companies.

In 2025 the coal holdings lost $250 million of value while Tower Bersama and Merdeka gained $352 million between them, and Saratoga attributes the year's $248 million net investment gain specifically to those two share prices [33].

The offset is worth being precise about, because only part of it is durable. Against coal, Tower Bersama has moved the other way in every one of the last four years: coal up 71% and towers down 37% in 2022 — a move that was half ownership change, as noted above — coal down 38% and towers up 15% in 2023, coal up 83% and towers down 3% in 2024, coal down 20% and towers up 17% in 2025. Merdeka has not. It rose with coal in 2022, fell with coal in 2023, and only diverged in 2024 and 2025. The year that matters most for a reader sizing downside is therefore 2023, when Merdeka fell $389 million and Adaro Energy fell $464 million together and the whole portfolio dropped 20% [34]. Roughly half the portfolio is metals and coal, and those two have moved together as often as apart. The tower stake is the genuine counterweight, and it is 30.7% of the book.

The fourth holding has done neither. Mitra Pinasthika Mustika has been marked lower in every year of this record — $203 million in 2021, then $184, $173, $155 and $147 million — a 15.7% decline in rupiah terms in the one operating business Saratoga controls outright.

Saratoga names a narrower version of this in its risk disclosures, where it says that "certain investments, such as in ADRO and MDKA, provide a natural hedge against the Company's U.S. dollar liabilities" [35]. That is a currency point, not a cycle point, and the dollar borrowings it hedges were down to $15.0 million at the end of 2025, against $50.5 million of dollar cash [36].

The company also trades around these positions more than a static holding table suggests. In 2025 it bought 121,764,199 Merdeka shares on 5 March, taking its stake to 20.08%, then sold 211,103,896 shares on 26 August, bringing it back to 19.47% — buying before a year in which Merdeka's marked price rose from $0.100 to $0.137, and trimming into it [37], [38]. Effective ownership of Alamtri rose from 15.78% to 16.52% and of Adaro Andalan from 14.21% to 15.15% over the same year, as those marks fell [39]. The filings do not separate purchases from the effect of investee buybacks, so the direction is clear but the mechanism is not.

Where management says the next capital goes

The forward sector list in the FY2025 report is short and consistent across both places it appears. The Board of Directors writes that capital is going toward "healthcare, digital infrastructure, renewables, and consumer", underpinned by demographics and the sustainability agenda and offering "multi-decade growth potential beyond cyclical trends" [40]. The Business Prospects section names the same four [41].

Against the holdings table, that list describes where the company intends to go rather than where it currently is. Tower Bersama qualifies as digital infrastructure and is 30.7% of the portfolio. Metals and coal — Merdeka, Alamtri and Adaro Andalan, 45.8% of the portfolio between them — are not named, though Alamtri's renewables arm and Merdeka's battery-materials business sit adjacent to two of the four themes. The phrase "beyond cyclical trends" is management's own characterisation of what the present portfolio is. Healthcare, renewables and consumer sit almost entirely inside the $711 million of everything else.

The segment note shows how that smaller half is performing. Saratoga reports three segments — Blue Chip, Digital Technology and Growth Focused. In 2025 the Growth Focused segment produced $90 million of income against an $18 million loss in 2024, with reportable assets up from $458 million to $568 million. The Digital Technology segment lost $18 million in 2025 after losing $16 million in 2024, and its reportable assets fell from $58 million to $43 million [42]. Two consecutive loss years and a 23% decline in carrying value is a small number against a $3,646 million portfolio, but it is the only part of the book where the newer strategy has a track record long enough to read.

How investee trouble reaches the balance sheet

Saratoga does not consolidate its investees and does not guarantee their debt. The FY2025 consolidated statements carry no contingent-liability note and disclose no guarantee given in favour of any portfolio company. The link the filings do disclose between an investee's share price and Saratoga's own obligations sits in the borrowings note: "The outstanding loans are secured by pledges of TBIG, MPMX, MDKA and/or ADRO shares, owned (directly or indirectly) by the Company. The Company is also required to maintain a certain minimum investment market value to debt." [43] The same wording appears in the 31 March 2026 interim statements, by which point borrowings had fallen to $44 million [44].

That is a margin-loan structure, and the minimum ratio itself is not disclosed. What is disclosed is how much headroom sits above it.

Sources: loan-to-value as disclosed in the FY2021 [45], FY2022 [46], FY2023 [47], FY2024 [48] and FY2025 [49] Annual Reports; the 2020 figure is as restated in the FY2021 report.

The stress arithmetic is undemanding. The most levered recent year-end was 2024, with $104 million of net debt against a $3,451 million portfolio [50]. Repeating 2023's 20% portfolio fall from that position would have taken loan-to-value from 3.0% to 3.8%; halving the portfolio would have taken it to 6.0%. On the end-2025 position of $29 million against $3,646 million, a 50% portfolio fall gives 1.6% [51]. For the pledge covenant to bite, the four listed prices would have to fall by an order of magnitude more than they ever have in this record. On the evidence available, the holding company's own solvency is not where the risk in this security sits.

The risk that does sit here is mark volatility, and the audited accounts quantify it directly. A 10% move in the relevant share prices at 31 December 2025 changes reported equity and profit by $112.0 million for Tower Bersama, $85.6 million for Alamtri and Adaro Andalan together, $64.9 million for Merdeka and $14.6 million for Mitra Pinasthika Mustika [52].

Source: FY2025 Annual Report, Note 18 Financial Risk Management, share price risk sensitivity as at 31 December 2025 [53].

Those four sensitivities total $277 million — 19.3% of the $1,313 million market capitalisation at the 27 July 2026 close, and 7.7% of published net asset value. One disclosure detail is worth flagging. The Tower Bersama, Merdeka and Mitra Pinasthika sensitivities are each exactly one-tenth of the value the net asset valuation table carries for them. The Alamtri and Adaro Andalan line is not: it implies a base of $856 million against the $1,021 million the same accounts carry for the four coal-linked holdings, a $165 million difference. In the FY2024 accounts the equivalent gap was $360 million [54], [55]. The likely explanation is the "mainly" in the associates footnote — Adaro Strategic Capital and Adaro Strategic Lestari hold assets besides coal shares — but the notes do not reconcile it, and the reader is left unable to size the coal exposure to better than a $165 million band.

Two smaller exposures complete the picture. Saratoga carried $44 million of receivables at the end of 2025, of which $42 million was declared but unpaid dividends from the Adaro complex and $1.6 million a loan to a growth company; against a gross balance of $48 million the group carries $4.0 million of impairment, down from $6.7 million a year earlier [56], [57]. And the leverage that does exist sits at the investees, where Saratoga's own filings record it without consolidating it: Tower Bersama issued $650 million of dollar bonds and $455 million of rupiah bonds in 2021 [58], $351 million in 2022 [59], $358 million in 2023 [60] and $291 million in 2024 [61]. Of the $1,000 million raised in rupiah over those three years, $840 million carried a 370-day tenor — a book that is refinanced continuously rather than termed out, alongside a $325 million revolving facility extended to October 2029 [62]. On the mining side, Merdeka raised $780 million across four bonds in 2022 [63], and in 2025 alone issued a further $168 million while Merdeka Battery Materials issued $1,008 million of sukuk [64].

Saratoga's own risk table concedes the exposure without quantifying it, listing "Exposure to Industry Risk in Which Our Investees Operate" and answering it with diversification and "regular performance and risk reviews" [65].

What would change the read

The read here is that the four core holdings are large, liquid positions whose aggregate mark is 7.7% lower than it was four years ago; that the tower stake has offset the commodity holdings in each of those four years while Merdeka has offset them in only two; and that investee leverage is substantial but reaches Saratoga only through a pledge covenant with headroom a repeat of the worst drawdown in this record would barely touch. Three things would move it.

If Adaro Andalan and Alamtri sustain distributions through a soft coal price — the January 2026 $250 million interim already approved is one data point [66], against $300 million paid in June 2025 for the prior year [67] — the coal half of the portfolio behaves more like an annuity than a price bet, and the 2025 marks understate it. If the ADMR aluminium smelter ramps to its 500,000 tonne phase one and Merdeka's downstream nickel projects convert capital expenditure into cash, the metals half becomes a compounder rather than a price proxy. And if the Growth Focused segment repeats 2025's $90 million of income for another two years, the case stops depending on the four core names at all.

The strongest fact against this read is the one that ends the section above: the $165 million unreconciled gap between the coal carrying value and the coal sensitivity base means the exposure cannot be sized precisely from these accounts. A reader who needs that precision has to go to Alamtri's and Adaro Andalan's own filings.

Two limits on this chapter should be stated plainly. None of the investees' own financial statements are in this corpus — every operating figure above is Saratoga's description of a company it does not control, published in its own annual report, and the investee-level balance sheets that would settle a look-through leverage question are not here. And web research was unavailable throughout this run, so no commodity price data, broker work or investee disclosure after March 2026 could be checked. The related question of what the unlisted 15% of the portfolio is actually worth is unexamined, as is the record of realisations across Saratoga's full listed life.