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Jakarta Post

IPO target increasingly forlorn hope for struggling IDX

  • Anggi M. Lubis

    The Jakarta Post

Jakarta   /   Fri, July 24, 2015   /  04:16 pm

While more firms are expected to go public in the second half as the market improves, it remains a Herculean task for the bourse to meet its target of listing 32 new companies by year-end.

So far this year, only 11 new firms have listed their shares in the bourse, and the Jakarta Composite Index (JCI) has been the region'€™s worst-performing index, hamstrung by an economy growing at its slowest rate since 2009.

University of Indonesia stock market expert Budi Frensidy said on Thursday that it appeared impossible for the Indonesia Stock Exchange (IDX) to meet its new-company target, as the gloomy outlook discourages firms from looking to raise funds from the capital market.

'€œIt will be difficult to meet the target given the current bearish market. Investors have to be encouraged not to be pessimistic and negative sentiments have to be addressed to invite more companies into the market,'€ Budi told The Jakarta Post.

The JCI has dropped around 6 percent so far this year to a recent level of around 4,900. The country'€™s economy hit 4.7 percent in the first quarter, the slowest level since 2009, weakening consumer spending and limiting business expansion.

In June, the index slipped below its psychological barrier of 5,000 after a series of foreign sellouts that started early in April, leaving foreign net purchase at around Rp 4.24 trillion after previously peaking at around Rp 15 trillion.

At least five firms are set to go public in the third quarter, including seismic survey services firm Gelombang Seismic Indonesia, which will offer 42.86 percent of its enlarged capital in an IPO and list the shares on the IDX on Aug. 13.

IDX corporate listing director Samsul Hidayat has said that four other firms are expected to enter the bourse in the third quarter, including Bank Harda Internasional, Victoria Insurance, wireless broadband firm Internux and an unnamed IT firm.

The Financial Services Authority (OJK) and the IDX regulator had aimed to see 32 companies make their debut in the bourse this year, a figure revised down from an initial 35.

The 11 companies that have gone public so far this year include lender Bank Yudha Bhakti (BBYB), hospital operator Mitra Keluarga Karyasehat (MIKA) and property developers PP Properti (PPRO), Puradelta Lestari (DMAS), and Mega Manunggal Property Tbk (MMLP).

Mining firm Merdeka Copper Gold (MDKA), IT company Anabatic Technologies (ATIC), manufacturer Garuda Metalindo (BOLT) and contractor Binakarya Jaya Abadi (BIKA) have also made their shares debut.

The companies cashed in a combined Rp 8.8 trillion in IPO funds, half of which was contributed by Mitra Keluarga, which pocketed Rp 4.45 trillion from its February debut thanks to a bright outlook for the hospital industry as society becomes more health-concerned.

Some of the newly listed firms '€” including PP Properti, Puradelta and Merdeka '€” have decided to trim either their floated shares or IPO prices in order to ensure their shares are taken up amid the economic slowdown.

Indonesian Securities Companies Association (APEI) chairman Susy Meilina said recently that in light of the currently tough economic conditions, some firms had decided to delay planned IPOs until next year.

MNC Securities, of which Susy is president director, has seen three firms in its IPO pipeline decide to postpone their plans.

Susi expressed pessimism, moreover, that conditions would pick up in the second half, saying she doubted that the government would be able to push growth above 5 percent this year.

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