More Active Listings at IDX This Year – SOEs Awaiting Big IPOs

JAKARTA (TheInsiderStories) – While the Indonesian capital market has seen more listing activity this year, the funds raised from initial public offerings remain small, as ‘bigger’ IPO deals are anticipated for the second half of 2017.

The country has seen 21 IPOs in total so far this year, already surpassing the 14 IPOs recorded for 2016. However, the combined total of funds raised from all of these IPOs, running from January through August, only stands at Rp 3.79 trillion ($284.1 million), still quite far off last year’s Rp 12.07 trillion ($905.2 million).

IPOs in Pipeline

Hamdi Hassyarbaini, Director of Surveillance and Compliance at the Indonesia Stock Exchange (IDX), the country’s local bourse, told the Insider Stories last week that there are seven companies that have submitted their plans for an IPO later this year to the country’s financial sector regulator, the Financial Services Authority (OJK) and the IDX, while there are three companies seeking to hold a ‘mini-expose’, or an event to present to the IDX their company’s financial performance for a planned IPO.

PT Emdeki Utama, a calcium carbide producer, known for its MDQ brand, will be the next newly-listed company at the Indonesia Stock Exchange (IDX), with an IPO slated for next month. The company was previously reported to be seeking to raise up to Rp 400 billion from the IPO, selling about 500 million new shares, equivalent to 25 percent of its enlarged capital from a September IPO.

PT Avia Avian, a paint company, seeks to raise $250 million from an IPO; PT Medikaloka Hermina, a company behind the Hermina hospital chain, expects to raise $169 million, and PT M Cash Integrasi (MCI), an IT company, looks to raise $15 million.

On top of those privately-owned companies, there are subsidiaries of state-owned enterprises (SOEs) in the IPO pipeline as well.

They include concrete pre-cast maker PT PP Pracetak, PT PP Urban and PT PP Energy  (a subsidiary of state-controlled builder PT PP Tbk). Property developer PT Wijaya Karya Building, PT Wika Realty and PT Wika Gedung (a subsidiary of state builder PT Wijaya Karya Tbk) and aircraft maintenance repair and overhaul provider PT Garuda Maintenance Facility (a subsidiary of flag carrier PT Garuda Indonesia Tbk) is also preparing to become a public company before the end of this year.

Another is insurance company PT Tugu Pratama Indonesia (a subsidiary of PT Pertamina), PT Jasa Armada Indonesia (a subsidiary of port operator PT Pelabuhan Indonesia II), and PT Adhi Persada Gedung, a subsidiary of construction PT Adhi Karya Tbk (IDX: ADHI).

Iwan Joeniarto, GMF President Director, has said that GMF planned to offer 30 percent of its shares to the public, hoping to raise up to $300 million to support its planned expansion to the international aircraft service market.

Handito Joewono, Chairman of Small and Middle Enterprises (SMEs) Division at the Indonesia Chamber of Commerce (KADIN) observed how many SMEs will not hesitate to undertake IPOs as more owners understand that going public increases their chance of survival.

With an IPO, there will be new capital and new investors, but in return companies also need to be better-managed. Companies also need to fulfill a number of requirements before going public.

Joewono said while the IDX has established an incubator program for startup companies to assist them to go public, this program needs supports from the regulatory side.

“The IDX has trained 40 startups in this incubator program, nurturing them so they can go public […] However, the main issue is regulations,” he said.

Kadin has urged the government to revise regulations to help tier-2 companies to go public.

“I think the new OJK Chairman should be more aggressive to push IPOs, especially for startup companies as well as SMEs,” he said.

Joewono also said the government also needs to push for more venture capital regulations, to support startup companies in the attempt get necessary financing.

After meeting with the capital market players at IDX on July 4, President Joko Widodo expect the capital inflow to Indonesian capital market could grow double this year compared to last year worth of Rp126 trillion ($9.47 billion) followed the positive momentum after Fitch Ratings, Moody’s, then Standard & Poors put Indonesia on the investment grade.

He noted, during January until May the capital inflows coming into Indonesia almost equal to last year’s figure worth of Rp124 trillion. To improve the market capitalization of IDX, President urged SOEs and foreign firms with their operations in Indonesia also list their shares and other instrument on IDX to finance their business.

1 USD = Rp 13,339

(Writing by Yosi Winosa, Email: