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More firms to tap into bullish stock market to raise funds
Less than two weeks into the year, companies are already lining up to raise funds from the capital market, to seize their chance to benefit from an anticipated busy bullish bourse with bond issues and public offerings
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ess than two weeks into the year, companies are already lining up to raise funds from the capital market, to seize their chance to benefit from an anticipated busy bullish bourse with bond issues and public offerings.
The latest data from the Capital Market and Financial Institutions Supervisory Agency (Bapepam-LK) in early January shows that four firms are already submitting notification for planned bond issues in the first quarter, to help finance their expansion.
Bapepam’s head for the service sector Noor Rachman said last week that these four firms were financing companies in need of fresh funds to support their business plans for this year.
“We’ll see more companies in the coming months,” he said.
Among the four are PT Astra Sedaya Finance (ASF), the vehicle financing subsidiary of the country’s largest auto maker, PT Astra International. ASF plans to issue bonds worth Rp 1 trillion (US$109 million) to increase its lending ability.
Apart from ASF, another financing company, Bank Central Asia (BCA) Finance, the financing arm of the country’s second largest bank BCA, will also issue bonds worth Rp 500 billion along with subordinated debts amounting to Rp 100 billion.
There are local multi-financing firms considering similar steps including BFI Finance with Rp 200 billion bonds in the pipeline and Bank Sulut with its Rp 450 billion bond issuance proposal.
The trend represent growing confidence on the part of the companies in the capital market as it becomes the alternative place to mobilize funds, aside from banks.
The Indonesian Stock Exchange (IDX) president director Ito Warsito is hoping that this positive trend will continue and help build the importance of Indonesia’s capital market in supporting the economy overall, especially in helping to finance its expansion.
“They [the companies] will get fresh funds that will be used for their business expansion and they can hire more people and with that we can reduce employment,” he said.
Aside from bond issuance, the companies can also generate funds with public offerings and also with rights issues, Ito says.
Data from Bapepam show that 25 companies issued bonds in 2009, generating Rp 26.3 trillion in total proceeds, much higher than the earlier target of Rp 15 trillion for this market sector.
Meanwhile, the number of firms that made rights issues stood at 12 last year, raising Rp 8.7 trillion in proceeds. During 2009 a total of 12 companies went public generating Rp 3.7 trillion in proceeds.
The IDX has targeted to have 25 new companies to list their shares in the bourse in 2010, much more than double the number of companies that went public in 2009.
Marciano Herman, director of investment banking at PT Danareksa, said these targets were within reach, considering that the market was in pretty good shape so far this year.
“I think the market is good enough for these companies to enter,” he said.
Many analysts believe Indonesia is expected to experience another bullish market in 2010, after posting significant growth in 2009 with the index rising almost 87 percent, with the IDX the second best performing bourse in the Asia Pacific region.
The IDX is expected to be among the top stock exchanges in the world in terms of robust growth this year due in part to the country‘s solid economic profile and rate of growth.
Indonesia will again be among the relatively few economies in the world to post positive growth this year, even higher than last year’s estimated growth of 4.3 percent, at a time when many economies are still only just coming out of recession.
Equity analysts have also predicted that this year would be another good opportunity for the IDX to continue its strong growth as the global market could be in excess liquidity on the back of a clear trend towards global economic recovery.
Some believe the index may reach above 3,000 points this year as more foreign investors enter the market.
The Indonesian Stock Exchange (IDX) closed last year at 2534.36 points.
