THE Indonesia Stock Exchange (IDX) is considering requiring minimum proceeds for initial public offerings (IPOs) as part of efforts to revamp listing rules.
“We are proposing more than 10 per cent” in minimum IPO proceeds, IDX president director Iman Rachman said in an interview 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 two trillion rupiah (S$170 million) in equity to ensure that their IPO proceeds are at least 10 per cent of total company valuation, instead of the 10 per cent minimum free float rule, Rachman said.
“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 South-east 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 exchange is eyeing 66 IPOs in 2025 with more companies seen to list after uncertainty over the new government abates.
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. BLOOMBERG
Share with us your feedback on BT’s products and services
