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.