Indonesia’s red-hot IPO market rides global EV push towards record year
[JAKARTA] Indonesia – the fourth most populous country in the world and the largest economy in South-east Asia – is well on pace to have its best year ever in terms of listings proceeds.
The latest update from the Indonesia Stock Exchange (IDX) shows that 68 initial public offerings (IPOs) are set to be completed by the end of October that will collectively raise over US$3.15 billion in first-time stock sales – well above the US$2.2 billion raised for the whole of 2022 and easily surpassing the figures in both Singapore and Hong Kong.
For the year to date, Indonesia is the fourth strongest market for IPOs, behind only China, the US and the United Arab Emirates.
IDX director I Gede Nyoman Yetna said that with 28 companies in the pipeline for this fourth quarter, Indonesia’s IPO market could set a new record in the country’s capital market history.
The total number of listings so far this year is up 120 per cent over the same period in 2022, with combined transaction values growing by 85 per cent year on year.
Size-wise, the vast majority of the deals aren’t that large. About nine in 10 of the listings this year raised below US$100 million each. But there have been a number of mega listings that have caught the attention of traders and investors in the region and beyond.
A NEWSLETTER FOR YOU
Friday, 8.30 am
Asean Business
Business insights centering on South-east Asia's fast-growing economies.
Analysts say the IPO boom is a result of governments around the world making a concerted effort to reduce their reliance on fossil fuels and turn to green energy.
Metals-rich Indonesia is the top nickel miner in the world, with the commodity a key ingredient for manufacturing the batteries that are used in electric vehicles (EVs) and other equipment like forklifts. Indonesia also has abundant natural resources of gold, copper, cobalt and tin.
Amman Mineral, a company that owns the second largest gold and copper mine in Indonesia, went public in July and raised US$709 million. Three months earlier, Harita Nickel – the first from Indonesia to process low-grade nickel ore into battery-grade metal – had a US$672 million listing.
SEE ALSO
Another local nickel producer, Merdeka Battery, raised US$591.8 million in its IPO. Merdeka Battery is a subsidiary of Merdeka Copper Gold, of which Chinese battery giant Contemporary Amperex Technology is a minority shareholder.
Among the big listings that are coming up is PT Pertamina Hulu Energi, a unit of state-owned energy giant Pertamina. The listing of a 10 per cent stake – likely to take place in 2024 – could raise at least US$2.5 billion, which would make it one of the largest IPOs in years.
Palm oil producer PalmCo, which controls the state palm oil estates, has said it is planning an IPO in Jakarta in the fourth quarter which could raise about US$500 million.
EV powerhouse
President Joko Widodo has an ambitious plan to position Indonesia as an EV manufacturing powerhouse and a major player in the EV supply chain by tapping the country’s vast nickel reserves and other resources.
Robertus Hardy, the head of research at Mirae Asset Sekuritas Indonesia, said the large amount of funds raised through IPOs this year is proof that investors are enthusiastic when it comes to the government’s policies on downstreaming.
The strong IPO activity is due to the high level of confidence in Indonesia’s ongoing transition to green energy.
“This proactive approach is driven not only by the country’s abundant mineral resources but also by other factors such as the promising local market, strategic positioning, and the capacity to provide competitive prices,” he said.
In its latest quarterly report, accounting firm EY noted that while the number of IPOs in the world has decreased year on year in the first half of 2023 due to higher inflation and interest rates, there is plenty of potential in Indonesia.
“Indonesia’s IPO market is expected to maintain its strength and momentum in the fourth quarter given the country’s structural reforms and its underlying high growth fundamentals,” wrote EY.
Copyright SPH Media. All rights reserved.
