The government is targeting between eight and 12 initial public offerings (IPOs) of state-owned enterprises (SOEs) in the next three years to end a hiatus of state-backed companies entering the stock market. SOE Minister Erick Thohir said on Thursday that the state-owned companies and their subsidiaries were expected to conduct IPOs through Indonesia Stock Exchange (IDX) between 2021 and 2023. He did not specify which companies would offer their shares. “We already have some [IPO plans] in the pipeline,” he said during the IDX opening ceremony that day. “However, they are not just going public. Their business fundamentals and sustainability must also be good.” The ministry has long been pushing SOEs to go public to improve their corporate governance and to cut back on state capital injections in the long term, especially after the COVID-19 pandemic forced the government to disburse billions of dollars in relief packages. Even before the pandemic, state-owned companies have hardly made attempts to go public as they struggled with poor financial conditions. The last SOE that entered the stock market was cement producer PT Semen Baturaja in 2013.
State-owned oil company PT Pertamina’s insurance unit, PT Auransi Tugu Pratama, went public in 2018 to fund its expansion. “Many SOEs are sexy because they have clear long-term plans, such as in developing electric vehicle batteries or digital products,” Erick said. Pertamina, electricity company PLN and mining holding company MIND ID are planning to develop a battery factory in Indonesia. Telecommunications giant PT Telekomunikasi Indonesia is heavily investing in internet-based services for future growth. Consulting firm Deloitte has projected that there will be more IPOs by SOEs and small and medium enterprises (SMEs) in 2022 in response to tax cuts and a relaxation of administrative requirements. “Further corporate tax reductions for listed companies are also expected to create a favorable impact on the IPO market next year,” said Deloitte Indonesia disruptive events advisory leader Joe Lai in November.
Several SOEs announced plans in 2019 to take their subsidiaries public, including publicly listed construction companies PT Wijaya Karya (Wika) and PT Adhi Karya. However, the plans have been halted as a result of the COVID-19 pandemic. Last year, publicly listed toll road operator PT Jasa Marga also announced that it was planning to take its subsidiary, property developer PT Jasa Marga Related Business (JMRB), public in the next few years, according to a filing with the IDX. Deloitte noted that Indonesia recorded more IPOs last year than any other stock exchange in Southeast Asia, its third consecutive year holding the title. IDX recorded 51 IPOs throughout in 2020, slightly lower than the 55 IPOs recorded the previous year. The bourse expects 30 IPOs in 2021.
