The Indonesia Stock Exchange (BEI) is actively working to encourage both private companies and state-owned enterprises (BUMN) to list on the capital market through Initial Public Offerings (IPOs). I Gede Nyoman Yetna, Director of Company Assessment at BEI, has been engaging in discussions with various private entities, BUMNs, and independent institutions to formulate attractive incentives. The goal is to identify and implement measures that will facilitate a seamless and comfortable entry for these companies into the stock exchange.
“We are looking into what incentives need to be accommodated so that, ideally, both state-owned enterprises and private companies can comfortably enter the capital market, and we can address their needs effectively,” Nyoman stated to reporters at the BEI Building in Jakarta recently. This strategic initiative underscores BEI’s commitment to expanding its market reach and depth.
Naturally, this ambitious plan requires strong backing from government regulations. Nyoman affirmed that BEI broadly supports the proposed incentive policies designed to attract prospective listed companies. These incentives are crucial for creating an appealing environment for companies considering a public listing.
Through these incentives, BEI aims to motivate companies with substantial assets to come forward and list their shares on the capital market in significant numbers. This influx of larger entities is expected to bolster market capitalization and liquidity, making the Indonesian market even more robust and dynamic.
“The objective remains largely the same: to encourage large, medium, and small companies alike to utilize the capital market. Now is truly the opportune moment to enter the capital market,” Nyoman added, emphasizing the current favorable conditions for market participation.
Addressing ‘Backdoor Listing’
Backdoor listing refers to a process where an unlisted private company gains public company status by acquiring or merging with an existing publicly listed entity. This allows them to bypass the traditional and often lengthy official IPO process.
I Gede Nyoman Yetna, Director of Company Assessment at BEI, acknowledged that several mechanisms enable such practices, including through rights issues. However, BEI’s primary focus remains on the integrity and sustainability of such transactions.
“What we are emphasizing is how to ensure that the parties entering the market possess the willingness to build the company, and, secondly, they have the necessary assets to boost the company’s growth effectively,” Nyoman explained. This highlights BEI’s rigorous approach to safeguarding investor interests and promoting healthy corporate development.
He further stressed that these two aspects are paramount to guaranteeing the long-term sustainability of companies post-acquisition. BEI also pays close attention to the identity and capabilities of the controlling parties of the listed company.
“First and foremost, we ascertain who the controlling party is. This party, within this context, must be capable, competent, and possess the willingness to build the company for the future,” he reiterated, outlining the critical criteria for approving such corporate actions.
BEI anticipates that the injection of assets through such schemes will lead to positive transformations in the company’s performance, ultimately benefiting shareholders. The exchange seeks to ensure that these corporate maneuvers contribute tangibly to enterprise value and shareholder returns.
Nyoman, however, refutes the informal term “backdoor listing,” preferring to characterize it as a legitimate “other corporate action.” He believes the term “backdoor” misrepresents the structured nature of these processes within the regulatory framework.
“If we look at the process of becoming a listed company, it can be either direct or through other corporate action mechanisms, which people colloquially refer to as ‘backdoor.’ The term ‘backdoor’ is certainly not used by us; instead, we refer to these as ‘other mechanisms’,” Nyoman clarified, underscoring the formal terminology used by the exchange.
Summary
The Indonesia Stock Exchange (BEI) is actively developing incentive schemes to encourage private and state-owned enterprises, particularly those with substantial assets, to conduct Initial Public Offerings (IPOs). Director I Gede Nyoman Yetna is engaging with various entities to create attractive measures that facilitate comfortable market entry and address their specific needs. These initiatives, which require strong backing from government regulations, aim to significantly bolster market capitalization and liquidity by attracting a greater number of companies to list.
BEI also oversees processes colloquially known as “backdoor listing,” which it formally refers to as “other corporate actions,” where unlisted companies gain public status through mergers or acquisitions. The exchange prioritizes the integrity and sustainability of these transactions, demanding that controlling parties demonstrate a strong willingness to build the company, possess adequate assets for growth, and be highly competent. This rigorous oversight ensures that asset injections lead to positive performance transformations and ultimately benefit shareholders.