Home Investor Corner IDX Simplifies IPO Procedures for Startup Companies

IDX Simplifies IPO Procedures for Startup Companies

Indonesia Stock Exchange (IDX) will continues to attract more startup companies become a listed - Photo: Special

JAKARTA (TheInsiderStories) – Indonesia Stock Exchange (IDX) will continues to attract more startup companies become a listed companies, said the official yesterday (09/17). The bourse has provided relaxation, such as changes part of the initial public offering (IPO) rules.

I Gede Nyoman Yetna Setya, IDX’ director, give an example, the regulator regulated that the company required have a Net Tangible Assets (NTA) in a certain size to become an issuer. The regulation was often complained because not all companies had the tangible assets such as technology companies.

“With NTA, there are many complaints from various parties because not all companies have tangible assets,” he told reporters yesterday.

Now, he continued, the IDX changes the requirements the prospective issuers no need to meet the NTA requirements but must have revenues. If it does not also penetrate the requirements regarding revenue, the bourse will consider the market capitalization of the company.

Previously, information and communications technology minister Rudiantara hoped Indonesian Financial Services Authority (FSA) or IDX, to issue regulations for startup companies holding or unicorn to be able conduct an IPO in the local stock exchange.

Therefore, he continued, all the ecosystems associated with the capital market, whether on the part of the community or investors, fund managers, and stakeholders in the Indonesian capital market, should share the same approaches.

He said that one of the factors that have become an obstacle for unicorns to conduct an IPO is stock price valuation. Thus the government and the authority will carry out an assessment of unicorn companies.

“Sooner or later, the initial investors in these unicorns would have to find ways to exit from these unicorns (to realize gains),” he adds.

The seriousness of small and medium enterprises (SMEs) and startups to take the floor on the stock exchange is increasingly attracting the attention of investors. This was proven during the initial listing, the share price of a number of these startup issuers reached the upper limit of auto reject.

Artha Sekuritas Analyst Frederik Rasali rated, since the FSA through POJK 53 / POJK.04 / 2017 gives a red carpet to SMEs and startup to take the floor, the opportunity is used to obtain new funding, business expansion and increase business capacity in the future.

At present the number of SMEs in Indonesia recorded 62.92 million units or 99.92 percent. The contribution of MSMEs to gross domestic products reached 60 percent and employment of 116.73 million people or 97.02 percent of the total workforce employed.

One of the startup ready to go IPO in this month namely PT Optima Prima Metal Sinergi (IDX: OPMS) with a unique business model in scrap iron for used vessels in Indonesia and has the potential to develop better considering the need for raw iron raw materials is still high as the construction of infrastructure projects in the country.

Three startup companies has conducted an IPO this year namely PT Yeloo Integra Data Net Tbk (IDX:YELO) and PT Kioson Komersial Indonesia Tbk (IDX:KIOS). “We also have built 69 startups through IDX Incubators in three cities,” said Yetna.

The bourse also approached several unicorns or startups which have a valuation of over US$1 billion to list on the stock exchange. Some unicorns that have been approached are PT Aplikasi Karya Anak Bangsa (GO-JEK) has met IDX on March 3, Tokopedia, which also met on Feb. 19, 2016 and Bukalapak in the same year.

“We are waiting for them, because the IPO is a strategic decision. From our side, we will ensure the availability of infrastructure in the form of regulatory support to make it easier for them to be listed on the stock exchange without any obstacles, “he said.

According to Yetna, the process of unicorns to be listed on IDX is a long process due to a consolidation with the shareholders. He stated, that the encouragement to startup companies conducting IPOs is one way to reach the target of the number of listed companies as much as 57 this year.

Another ways IDX does to increase the number of listed companies are to increase the awareness of companies in Indonesia to hit the public capital market, building a synergy with various institutions in Indonesia and engaging the FSA and capital market to enhance businessman awareness to the market.

Not only in terms of the number of listed companies, IDX will also increase the number of share investors by 25 percent of this year from the 2017 period to 2018 reached 223,749 investors. The growth in the number of investors are dominated by millennials or the age range of 18-30 years which has increased by more than 100 percent in the last two years.

In 2018, as many as 58 companies have conducted IPOs with fund raising of Rp16.42 trillion ($1.72 billion). The companies that conduct the IPO, at most or 19 companies are companies engaged in trade, services and investment.

IDX previously mentioned there were 13 companies already entered the bourse in the beginning of 2019, namely PT Meta Epsi Tbk (IDX: MAGP), PT Sentra Food Indonesia Tbk (IDX: FOOD), PT Estika Tata Tiara Tbk (IDX: BEEF), PT Pollux Investasi International Tvk (IDX: POLI), and PT Citra Putra Realty Tbk (IDX: CLAY).

Others, PT Bersatu Sejahtera Mandiri, PT Berjaya Berjaya Trans, PT Arkha Jayanti Persada, PT Menteng Heritage Realty, PT Capri Nusa Satu Properti, PT Nusantara Properti International, PT DMS Propertindo and PT Envy Technologies Indonesia.

Besides the 13 companies, there are other companies that also plan an IPO this year, namely a subsidiary of PT PP Tbk (IDX: PTPP) and PT. Bank Kesejahteraan Ekonomi (BKE).

by Linda Silaen, Email: linda.silaen@theinsiderstories.com