By Agustinus Tetiro & Abdul Aziz
September 17, 2013 — 10:17 am
With foreign investors looking to Indonesia’s equity market, the country is likely to meet its target to hold 30 initial public offerings this year, securities firm executives and Indonesia Stock Exchange management have said. Bond sales, however, may not reach last year’s figures.
The appetite to tap funds from the equity market remains strong, Hoesen, a director for company evaluation at the Indonesia Stock Exchange (IDX), said, predicting that the IDX will see a total of 30 initial public offerings this year.
“The appetite [for IPOs] is still there amid this volatile market,” Hoesen said. The Jakarta Composite Index rose 3.4 percent to close at 4,522.24 on Monday, extending last week’s 7.4 percent gain. A successful IPO last week in Jakarta can be seen as another sign that foreign investors are returning to the country’s equity market.
Siloam International Hospitals, the biggest private hospital operator in Indonesia, made its trading debut last week after a successful IPO garnered a significant amount of interest from global and domestic investors. Siloam, a subsidiary of property company Lippo Karawaci, raised Rp 1.4 trillion ($123 million) selling a 13.5 percent stake at Rp 9,000 a share. After the IPO, Lippo Karawaci’s ownership in Siloam was reduced to 86.5 percent.
Siloam was the 25th company to conduct an IPO in Indonesia this year, which would put the IDX on course to meet its target for new publicly traded companies this year. Mardy Sutanto, director of BCA Sekuritas, shared Hoesen’s view that the country would meet its 30 IPO target this year. “I still believe in the prospect of Indonesia’s economy,” Mardy said. Indonesia’s economy is forecast to grow close to 6 percent this year despite the global financial crisis and a weakening rupiah.
Indonesia’s central bank, Bank Indonesia, last week cut its economic growth forecast to 5.9 percent this year from its original forecast of 6.2 percent. Mardy said that foreign investors, which have unloaded their assets, including stocks, have started to return to the country.
“With a depreciating rupiah, these foreign investors can buy stocks at a cheap price,” Mardy said.
Indonesia’s rupiah traded at 11,423 against the dollar in Jakarta on Monday, making it one of the worst-performing currencies in the Asia Pacific region. The currency has declined by 18 percent so far this year. Sawit Sumbermas Sarana, Logindo Samudramakmur, Link Net, Grand Kartech and Arta Prima Indonesia are on the list for IPOs later this year, Hoesen said. Despite appearing on track for its IPO target, the local market may see fewer funds raised in bond sales this year compared to last year’s total because interest rates have been rising. So far this year, 45 Indonesian companies have raised a combined Rp 43.8 trillion in bond sales. Last year 53 Indonesian companies raised Rp 69.4 trillion selling bonds.
(Full disclosure: Lippo Group, owners of Siloam International Hospitals, also owns the Jakarta Globe).