7 In­done­sian firms pre­pare for IPOs de­spite mar­ket slump


De­spite se­ri­ous plunges in the stock mar­ket, cou­pled with a fal­ter­ing In­done­sian econ­omy and a de­clin­ing ru­piah, the In­done­sia Stock Ex­change (IDX) says that seven com­pa­nies still plan to hold ini­tial public of­fer­ings (IPOs) be­fore the end of the year.

The com­pa­nies that plan to hold IPOs are Gelombang Seis­mic In­done­sia, Val­lianz Off­shore Mar­itim, Vic­to­ria In­sur­ance, Media Ko­mu­nikasi Nu­san­tara Kor­porindo, In­ter­nux, Kino Sentra In­dus­trindo and Cipu­tra Res­i­dences.

Cipu­tra Res­i­dences, a sub­sidiary of prop­erty devel­oper Cipu­tra Group, re­port­edly sub­mit­ted its IPO pro­posal on Aug. 7, while another com­pany, Bank Harda In­ter­na­sional, re­cently made a list­ing on the stock ex­change.

“None of the seven com­pa­nies plan to back out of their plan to hold an IPO, as far as I know. How­ever, they must sub­mit their monthly fi­nan­cial re­ports for July if they want to get into the mar­ket this year,” IDX di­rec­tor for cor­po­rate list­ings Sam­sul Hi­dayat told The Jakarta Post at the In­done­sia Stock Ex­change on Fri­day.

Ac­cord­ing to Sam­sul, the firms will have to hold them next year if they are able to sub­mit their re­ports in Au­gust.

Com­ment­ing on the re­ported fall­out in the Jakarta Com­pos­ite In­dex (JCI), Sam­sul played down the im­pact and made as­sur­ances that the mar­ket re­mains con­ducive for in­vestors amidst the volatil­ity.

“It’s nat­u­ral for in­vestors to be con­cerned over the fall­ing JCI fig­ures,” he said.

In­done­sian stocks were lower af­ter the close on Fri­day, as losses in the trade, in­fra­struc­ture and prop­erty sec­tors pushed share val­ues lower. At the close, the JCI fell 2.39 per­cent to hit a new 52-week low.

Mean­while, af­ter as­sess­ing the cur­rent state of the mar­ket and the econ­omy in gen­eral, Mil­len­nium Danatama As­set Man­age­ment an­a­lyst Des­mon Sili­tonga com­mented that it would not be wise for the com­pa­nies to hold their IPOs at this time be­cause of the risk of open­ing to a low IPO price as a re­sult of drop­ping in­vestor con­fi­dence.

“It would be bet­ter if these IPOs were to be post­poned un­til mar­ket con­di­tions im­prove. There are many risks at hand and they also have to con­sider the cur­rent un­easy in­vestor sen­ti­ments,” Des­mon said.

He added that if that the com­pa­nies in­sist on hold­ing their IPOs un­der these con­di­tions, they could min­i­mize their risks by of­fer­ing a de­creased amount of shares in their IPOs and sell lower, but it would mean their rev­enues from the IPO would also be much lower.

The IDX had pre­vi­ously set a tar­get of 32 com­pa­nies mak­ing list­ings in the stock ex­change by the end of 2015, but only 12 firms have made IPOs this whole year, mean­ing the tar­get is still out of reach. “Judg­ing by the con­di­tions, 32 would be rather dif­fi­cult to achieve. But I re­mind you, last year the tar­get was also not reached. There are a lot of con­di­tions for this year’s rel­a­tive re­sults. When the con­di­tions are down, there won’t be many in­creases, un­less you’re a very es­tab­lished firm,” Des­mon said.

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