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IDX to allow SPACs, hopes Indonesian unicorns will go public locally
Attracting tech start-ups is one of the bourse’s many strategies to deepen Indonesia’s shallow financial market whose market capitalization-to-gross domestic product (GDP) ratio of 46.8 percent is the lowest among the ASEAN-6.
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The Indonesia Stock Exchange (IDX) logo is seen in front of a giant screen that displays information of the movement of stock prices at the IDX building in Jakarta, on March 13, 2020. (JP/Seto Wardhana)
T
he Indonesia Stock Exchange (IDX) plans to win over local tech unicorn listings by relaxing its rules this year after it was reported that three such companies were considering listing abroad.
IDX development director Hasan Fawzi said the bourse would pass regulations by July that would allow companies to go public using special purpose acquisition companies (SPAC) and to issue dual-class shares, both of which have been hot topics among tech start-ups worldwide.
“The nature of these new types of economies is different from traditional companies, so we need to anticipate their interest in going public,” he told The Jakarta Post on Wednesday, March 3, referring to tech start-ups such as fintechs and e-commerce platforms.
A SPAC is a shell company that raises money through an initial public offering (IPO) for the sole purpose of acquiring another firm. Because SPACs have no fundamental operation, they can conduct due diligence faster than regular companies and, therefore, allow the acquired firm to be listed sooner.
Hasan went on to say that the IDX was in the final steps of opening the bourse’s Main Board to loss-making companies with high valuation and good growth prospects, a characteristic of many big tech start-ups.
Attracting tech start-ups is one of the bourse’s many strategies to deepen Indonesia’s shallow financial market whose market capitalization-to-gross domestic product (GDP) ratio of 46.8 percent is the lowest among the ASEAN-6.
The IDX’s decision comes at a time when many unicorns want to go public as private investments dwindle. Unicorn funding in Southeast Asia only reached US$3 billion in the first half of 2020 compared to the $5.1 billion in the same period the previous year, according to the 2020 “e-Conomy SEA” report by Google, Temasek Holdings and Bain & Co.
