IDX Prepares Acceleration Board for SME’s Go IPO

Photo by IDX

JAKARTA (TheInsiderStories) – Indonesian Stock Exchange ready to lure the regulation on initial public offering (IPO) for small, medium enterprises (SME’s), through the acceleration board.

This initiative will complete the existing of Financial Service Agency (FSA) regulation No. 53/POJK.04/2017 as well as FSA regulation No. 54/POJK.04/2017 about Public Offering and Capital Increase by SMEs. This initiative will allow SME’s to rise fund at maximum Rp 1 trillion from the stock market.

As we know, President Joko Widodo continues explore how to create policies or instruments to catch up public and private investment for SMEs through capital market. Other initiative includes deployed people’s business credit into venture capital funds for startups.

In another potential scheme, the government is mulling a plan to make use of the the universal services obligation fund, which was originally intended to provide telco infrastructure in rural areas before being halted in 2015 due to lack of sourcing.

Nicky Hogan, IDX Development Director told The Insider Stories that this acceleration board will peg the rate to 20 percent for SME IPO, without concerning the number of shares outstanding. SMEs can have a sufficient IPO net tangible assets at least Rp 5 billion, lower than the definition of SMEs coming from the Ministry of Cooperatives and SME whose value below Rp 10 billion.

Since last April, IDX has selected 24 companies which consist of seven financial technology companies, five e-commerce firms, three lifestyle companies, three IoT firms, two news media companies and one software as a service to participate in IDX incubator program, that aims to mastering IPO process and preparation.

“We’ve set up an incubator for start-ups and SMEs. The program will be held in five months.  There are at least 24 SMEs has been selected. But this does not mean that they are ready for an IPO. But this is part of the process to get there,” said Nicky.

IDX incubator also give perspective on raised funds significance for SME’s, and encourages SME’s to embrace a transparency culture, and in order to familiar to such expose to their financial data publicly.

Sharmilla, Chairman of Indonesian Chamber of Commerce and Industry for IPO Working Unit added, that there are around 50 SMEs, under the association, who are planning to take the IPO route in the next five years. She expects 5 SMEs to list their shares on the IDX this year. Two of them are food and beverages firms with assets ranging from Rp 28 billion (US$2.1 million) to Rp 30 billion.

“We have five SME’s company in the pipeline ready for IPO,” She said.

Since last 2003, there are only 7 SMEs entering IDX. Okansa Capital was the first in 2003. Hortus Danavest, Yulie Sekurindo, Sanex Qianjiang Motor International followed a year later. Panca Global Securities joined in 2015, Okansa Persada in 2006 and Laguna Cipta Griya in 2007.

IDX noted that in the pas 10 years, Indonesia stock market return was 193.36 percent, higher than other stock market like United States that reached 57.85 percent, China that reached 16 percent, India that reached 93.13 percent, as well as Thailand that reached  126.96 percent. Almost 70 percent shares that listed in IDX has gained an increase. (YW)