Flying in the face of growing Indonesian unrest, Dairy Farm International Holdings said yesterday it had agreed to take a US$36.4 million stake in Indonesia's largest supermarket chain. Dairy Farm - the retail arm of the Jardine Matheson group - said it would take an effective 31.1 per cent stake in Hero Supermarket, describing the deal as a 'great strategic opportunity'. Dairy Farm group finance director Edouard Ettedgui said: 'We are long-term investors. We look through the period of uncertainty - what seems to be politically driven - and we see Indonesia as a vibrant and developing country. 'Hero is the largest supermarket operator in the country and it was always acknowledged as one of the best opportunities in Indonesia.' Hero Supermarkets is controlled by its founders, the Indonesian Kurnia family, and owns 71 supermarkets in Java, Kalimantan, Bali and Sumatra. The company also operates food outlets, bakeries, and convenience stores. Dairy Farm has worked with Hero since 1995 in developing the Mitra Toko Diskon discount grocery store chain. Under an agreement hammered out between the two parties, Dairy Farm will now purchase a bond from the Kurnia family exchangeable for 24.55 per cent of ordinary Hero shares, and buy a further 6.63 per cent direct stake in Hero. The bond is exchangeable for Hero shares after five years at no additional premium or cost. Dairy Farm said it would fund the acquisition from existing cash resources. As part of the deal, Dairy Farm will also take a direct role in the management of Hero as its regional director for South Asia, Michael Kok, will join Hero as chief operating officer. Ipung Kurnia will stay on as Hero's president director and chief executive officer. Dairy Farm said the cost of the investment would have a small negative effect on its earnings per share in the next few years, but would provide improved returns as the company benefited from its management input. The acquisition by Dairy Farm comes after the company announced a string of disposals during the past six months as it has sought to refocus its business interests. Starting last September, Dairy Farm has sold its interests in dairy products manufacturer Nestle Dairy Farm, Spanish supermarket chain Simago and its Mannings drugstore outlets in Taiwan. Mr Ettedgui said the disposals had given the company a strong financial base from which to seek further acquisitions in the region. He said: 'We have become a meaner and leaner company now. 'It is our strategy to expand in Asia and we will keep our ears to the ground.'