Will this be the best-ever year for IPOs in Indonesia?

Dealmaking is Indonesia is sizzling hot, with IPO proceeds booming in the first half of 2023 and plenty more in the pipeline. 

Deloitte predicts that the country – which is the world’s fourth most populous and Southeast Asia’s biggest economy – is set to have its best year ever in terms of listing proceeds.

This comes amid a declining global IPO market (5% down on last year), according to EY, with the Asia-Pacific region dominating the dealmaking market in the first half of the year.

Indonesia has led dealmaking so far in 2023, raising 70% of the total IPO proceeds in Southeast Asia with 44 IPOs in the first half of the year (compared to three in Singapore and 18 in Thailand) that raised a total of US$15,666 million.

This was largely thanks to three sizeable IPOs each raising more than US$500 million, according to Deloitte’s mid-year IPO snapshot report.  

Among these, the listing of a nickel miner (Harita Nickel) in April (US$683 million), an integrated EV battery materials company (US$627 million), a geothermal power plant operators (US$594 million) and an electric motor car wholesaler (US$58 million). 

Indonesia’s highly active IPO market is perhaps unsurprising given the country’s economic plans.

The foundation of President Joko Widodo’s economic policies to spur the Indonesian industry are two-fold – to transform Indonesia into a leading global EV supply chain hub, and monetise state-owned commodity assets.

The country has recently signed deals with Australia to collaborate on key EV production minerals lithium and nickel, for example.

“The country holds the world’s largest nickel reserves and the recent IPO of Harita Nickel is good gauge of the interest of both local and international investors,” Deloitte states.

Resource-rich Indonesia has already seen major listings with geothermal power firms and nickel and copper miners and is now planning to IPOs for its state palm oil planter and upstream oil and gas company in the coming months.

PalmCo, which controls the state palm oil estates including the world’s biggest palm plantation, is planning to register for an IPO in September or October, deputy cabinet minister Pahala Mansury, recently announced. While Pertamina Hulu Energi (PHE), the upstream unit of listed giant Pertamina, is expected to launch a share sale in August or September.

According to sources, PalmCo would raise around US$500 million, while PHE could raised at least US$1.3 billion.

Southeast Asia – hotspot for IPOs in 2023 amid economic growth

Indonesia’s increased dealmaking activity comes amid a booming IPO market for Southeast Asia, and APAC, more generally – despite global dealmaking taking a downturn.

The global IPO market has witnessed a 5% decline on IPO volumes from last year, according to a new report from EY, though Asia-Pacific has dominated accounting for 60% of listings in the first half of the year.

In the last six months, the number of IPOs in Southeast Asia in particular has risen 16% while proceeds increased 5%, Deloitte data reveals.

The region saw 85 IPOs raising US$3.3 billion in proceeds – led by Indonesia, with Thailand and Malaysia also seeing increased activity.

Thailand and Malaysia secured 18 and 16 listings, respectively, in the first half of 2023.

“Southeast Asia’s positive growth outlook is making the region an investor favourite as there continues to be an influx of foreign direct investment due to the region reopening its door, the restoration of the tourism industry, and the booming domestic demand,” said Deloitte.

Despite economic headwinds, the IMF expects Southeast Asia to be the world’s fastest growing region, with 4.6% growth in 2023, on the back of well-supported economic growth and declining inflation.

“With each country’s pro-growth policies, stable macroeconomics and healthy demographics of Southeast Asia, coupled with the growing impact of tech-enabled entrepreneus on investment, and strong trading relatkionships with China, there remains a sea of exciting opportunities in the regional capital markets and a healthy deal flow for investors to explore and tap on.”

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