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A package for delivery on a conveyor belt at online retailer Lazada's warehouse in Depok, south of Jakarta, Indonesia, March 26, 2018.Darren Whiteside/Reuters

The Canada Pension Plan Investment Board is investing US$200-million in a joint venture aimed at tapping into the growth of online shopping in Indonesia.

CPPIB announced the deal Monday, saying it will work with Australian logistics real estate specialist LOGOS to develop new facilities for third-party logistics operators, data centres and other industrial tenants in the Greater Jakarta area. Third-party logistics operators provide warehouses, transportation and other services to help clients fulfill e-commerce orders.

Jimmy Phua, CPPIB’s managing director and head of real estate investments for Asia, said the growth of e-commerce in Indonesia has spurred demand for “modern logistics facilities” in the country.

“One of the key investment themes for CPP Investments has been Asia’s growing middle class and domestic consumption,” Mr. Phua said in a statement.

Indonesia’s online commerce market was worth about US$8-billion in 2017, according to a 2018 report by McKinsey and Co. The global consulting firm projected that will surge to between US$55-billion and US$65-billion by 2022, comparing the growth trajectory with that seen in China between 2010 and 2015.

McKinsey cited growing digital adoption in the country of about 270 million people, estimating Indonesia would add about 50 million internet users between 2015 and 2020. Other trends in the country, including the high use of social media and the growing number of purchases made using mobile devices, could also support the growth of e-commerce.

“We are seeing growing demand from both multinational and domestic customers for high-quality logistics space in Indonesia, which is underpinned by the region’s economic drivers of e-commerce, manufacturing and diversification to decentralized supply chains,” said Stephen Hawkins, the managing director of LOGOS, in the statement Monday.

CPPIB and LOGOS first established a joint venture in Indonesia in 2017, when the Canadian pension manager invested US$100-million for a 48-per-cent stake in another logistics project led by LOGOS. Ivanhoé Cambridge, the real estate arm of Canada’s second-largest pension fund manager, Caisse de dépôt et placement du Québec, took an equal stake in that project.

Ivanhoé Cambridge is also a shareholder of LOGOS, which has operations in Australia, China, Singapore, Indonesia, Malaysia, Vietnam, India and New Zealand.

The partners did not disclose the total size of the new joint venture, but Mr. Hawkins said through both ventures the company plans to “deliver up to US$1-billion of high-quality logistics facilities to this market over the coming years.”

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