The Indonesia Stock Exchange (IDX) is considering requiring minimum proceeds for initial public offerings as part of efforts to revamp listing rules.
“We are proposing more than 10%” in minimum IPO proceeds, IDX President Director Iman Rachman said in an interview on the sidelines of the World Federation of Exchanges annual gathering in Kuala Lumpur last week.
The proposal, along with several other reforms, are under discussion with Indonesia’s Financial Services Authority. Rachman said they may be approved early next year.
Plans to revise the listing rules came after the deletion of PT Barito Renewables Energy from FTSE Russell indexes in September, due to “high shareholder concentration” — a claim the company denied.
However, FTSE’s move, and the sell-off it triggered, raised concerns among investors over inadequate guidelines to maintain sufficient stock liquidity.
The IDX has started advising firms with more than 2 trillion rupiah ($170 million) in equity to ensure that their IPO proceeds are at least 10% of total company valuation, instead of the 10% minimum free float rule, Rachman said.
See also: Mr DIY Indonesian business plan IPO to raise up to $399 mil
“This is what we are doing immediately. It’s a lesson learned from what’s happening in the market,” he said. “It’s a bridging requirement before our proposals are approved.”
The new requirements could help bolster the vibrancy of Southeast Asia’s largest stock market, where new listings have lagged the bourse’s target of 62 for this year. Only 39 companies have come to market so far in 2024, which Rachman credited to jitters around Indonesia’s elections and leadership transition.
Rachman said 25 more IPOs are in the pipeline until the end of the year. The Indonesian sister company of Mr DIY Group (M) Bhd. plans to raise as much as 4.7 trillion rupiah through an IPO in Jakarta.
The exchange is eying 66 deals in 2025 with more companies seen to list after uncertainty over the new government abates.
“Hopefully by next year, the state-owned enterprises or their subsidiaries will come to market,” given that some of them were waiting for the new cabinet, he added.
Although challenges remain, including results of the US election and the pace of interest-rate cuts by the central bank, “we are still confident the IPO numbers in 2025 will be even better than this year”, he said.
