According to the Indonesian Employers Association (Apindo), one of the obstacles faced by companies in conducting an IPO is their uncertainty with regard to becoming more transparent, considering that most Apindo members are family companies.
"I see that the obstacle faced is their hesitation in terms of transparency. They are a little less comfortable with the openness," Apindo Chairman Hariyadi Sukamdani said in Jakarta on Tuesday (Feb 20).
They are worried about the transparency, for fear it would cause other problems since transparency will place the company under the public spotlight. In fact, going public would help prevent polemics at family firms.
The Indonesian Stock Exchange (BEI) is of the view that companies which conducted IPO would prevent polemics at family firms especially with regard to share ownership.
"IPO is one of the means for family companies to avoid conflict, because in general the company`s founder is a parent who will bequeath his or her company," said Senior Executive Vice President, Head of Potential Issuer Development of BEI, Umi Kulsum, in a seminar `Road To Go Public` in Jakarta, last week (Feb 14).
Through IPO, the company will also gain wider funding access in order to develop the business, and the company will be able to improve the implementation of its good corporate governance (GCG).
By conducting an IPO, a company will be encouraged to implement good corporate governance, and also its performance will be monitored by the public. Becoming a company listed on the Stock Exchange will also encourage resources within the company to work professionally. That way, the company can survive and continue its business.
On the same occasion, Tower Bersama Group Chief Financial Officer (CFO), Helmy Yusman Santoso said that one of the advantages of the company to do an IPO is that access to funding will become easier both domestically and globally. "After the IPO, the company can issue bonds both domestically and abroad," he said.
Meanwhile, Head of BDO Indonesia`s Valuation, Panca Arief Jatmika said that there are three stages to conduct IPO, namely the study phase, preparation stage, and implementation of IPO and business expansion.
He explained that the review process begins with understanding the company through the assessment of internal and external factors that will affect the success of the IPO. The review will help understand the company`s position, future and business prospects.
For the preparation phase of the IPO, he continued, the company performs stock valuation, restructuring, and prospective investors search. And the last stage is to implement the IPO and use the IPO funds to expand business.
Hence, Apindo will aggressively educate its members on the capital market industry as well as its transparency aspect, so that its performance can improve in a sustainable manner. "We raise awareness that if they are willing to advance, they should be transparent or else they would not have good governance," Sukamdani explained.
Two companies of Apindo members are ready to go public through the initial public offering mechanism at the Indonesian Stock Exchange (BEI) in 2018.
"Two members of Apindo have confirmed their plan to go public in 2018. One of them is doing business in the palm oil sector, while the other is operating in the coal business sector," Apindo Chairman Sukamdani noted during a seminar on "Optimizing the Role of Financial Sector to Increase Economic Growth" in Jakarta on Tuesday.
Sukamdani remarked that both companies are in the process of implementing the IPO. Other members of Apindo are expected to follow suit, as the company`s momentum to conduct an IPO this year is quite good amid strong national economic fundamentals and positive capital market performance.
"There are some 500 large-sized companies, with average assets reaching above Rp500 billion and turnover of above Rp500 billion. In terms of management readiness, we are pushing 100 companies to go public through the IPO mechanism, as the momentum is good," he explained.
Currently, Sukamdani pointed out that as many as five companies, comprising two regional firms and three from Jakarta, are also contemplating on conducting an IPO.
BEI President Director Tito Sulistio said his side will continue to encourage domestic entrepreneurs to utilize the capital market to gain funding for the development of the company.
"If the economy, inflation, and economic growth are stable coupled with revenue growth of the largest domestic issuers in the ASEAN (Association of Southeast Asian Nations), I believe the perception is positive, and please utilize the capital market as a means to mobilize long-term funds," he remarked.