SOE holdings enliven stock exchange: Pelindo to MIND ID prepare for IPO
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Investor Daily - Holding BUMN ramaikan bursa: Pelindo hingga MIND ID bersiap IPO
18 July 2024
By Muawwan Daelami
Jakarta, ID — State-Owned Enterprise (SOE) holdings with assets in the hundreds of trillions of rupiah are set to invigorate the Indonesia Stock Exchange (IDX) through initial public offering (IPO). IPO is seen as a solution to address governance issues and weak risk management within SOEs. Some of the holdings said to be preparing for IPO include PT Pelabuhan Indonesia (Pelindo), PT Mineral Industri Indonesia (MIND ID), and PT Aviasi Pariwisata Indonesia (InJourney). Referring to the consolidated reports for the 2023 fiscal year, the combined assets of these three SOE holdings total Rp476.82 trillion.
SOE Deputy Minister Kartika Wirjoatmodjo emphasises that holding companies must integrate financial governance across their subsidiaries. “This was lacking in the past, leading to frauds at the subsidiary level. Now, we are addressing this comprehensively,” said Tiko, as he is familiarly called.
Through this approach, Tiko expects that SOEs like Pelindo, which has undergone a merger, InJourney, which integrates all airports, tourism, and PT Garuda Indonesia Tbk (GIAA), as well as MIND ID can become global top-tier companies within the next five years. “Medium-sized SOEs will emerge, and our hope is to eventually take them public through IPO. This way, we will no longer have small, insignificant listed companies like PT Indofarma Tbk (INAF) and PT Adhi Karya Tbk (ADHI). Instead, we will focus on SOEs with significant size, competence, and positive future outlook for the capital market,” explained Tiko.
This is considering that the number of SOEs in the top tier is still limited. There are only a few companies in the top tier such as PT Bank Mandiri Tbk (BMRI), PT Bank Rakyat Indonesia Tbk (BBRI), PT Pertamina, and PT Telkom Indonesia Tbk (TLKM).
Analysts believe the SOE Ministry’s initiative to bring SOE holdings to the stock exchange is expected to enhance market liquidity. After all, holding companies tend to have strong business track records and fall into the category of blue-chip stocks.
This perspective is well-founded considering the significant contribution of SOEs to the capital market presently. Tiko points out that SOE issuers are among the largest contributors to market capitalisation on the stock exchange, totalling Rp2,500 trillion. “We also provide good returns; our total stock return (TSR) over the last five years reached 28%, slightly higher than the private sector’s TSR. Specific stocks like BBRI also offer high dividend yields. So, besides generating dividends for majority investors, we ensure that minority shareholders receive the same standards as expected by investors,” says Tiko.
Supply of blue chips SOEs
SOE observer Toto Pranoto reckons that the IDX has long been without supply from IPOs of blue chips SOEs. Considering this, the SOE Ministry’s plan to encourage IPOs for its companies is now at the right momentum. “The advantage of SOE IPOs is that they can enhance market liquidity because they usually attract significant investor interest. From the SOE perspective, it is not only an alternative for obtaining fresh funding through IPOs but also an opportunity to improve the good corporate governance (GCG) of SOEs going public,” says Toto to Investor Daily on Wednesday (17/7/2024).
A similar opinion is expressed by Capital Market Analyst and Co-Founder of Pasardana, Hans Kwee. The analyst, who goes by Hans, sees that IPOs of SOE holdings will have a positive impact on the SOEs themselves by enhancing leverage, coordination, and collaboration. “Therefore, it can be assured that IPOs of large companies like SOE holdings will be good news for market participants,” said Hans when contacted by Investor Daily on Wednesday (17/7/2024).
Profile of SOE holdings
Pelindo is an SOE holding company serving the port sector. It oversees several other SOEs such as PT Pelindo Terminal Petikemas, PT Pelindo Multi Terminal, PT Pelindo Solusi Logistik, and PT Pelindo Jasa Maritim.
Pelindo’s assets in the 2023 fiscal year were recorded at Rp118.34 trillion, with equity at Rp46.84 trillion. The company’s operating revenue grew by 4.44% to Rp31.02 trillion last year, and net profit increased by 2.66% to Rp4.01 trillion.
Meanwhile, InJourney oversees several SOEs, including PT Angkasa Pura Indonesia, PT Integrasi Aviasi Solusi, PT Angkasa Pura I, PT Angkasa Pura II, PT Hotel Indonesia Natour, PT Taman Wisata Candi Borobudur, Prambanan & Ratu Boko, PT Sarinah, and PT Pengembangan Pariwisata Indonesia (ITDC), with PT Garuda Indonesia Tbk (GIAA) soon to follow.
InJourney’s total assets in the 2023 fiscal year reached Rp99.28 trillion, with equity at Rp33.44 trillion. The company’s operating revenue increased by 47.25% to Rp23.35 trillion, and net profit surged by 210.86% to Rp1.1 trillion.
MIND ID boasts an equally impressive profile. An SOE holding company in the Indonesian mining industry, its members include PT Aneka Tambang Tbk, PT Bukit Asam Tbk, PT Freeport Indonesia, PT Inalum, PT Timah Tbk, PT Vale Indonesia Tbk, and PT MIND ID Trading. MIND ID achieved revenues of Rp107.87 trillion in 2023, with net profit growing by 22.4% to Rp27.5 trillion. The company’s total assets reached Rp259.2 trillion, with EBITDA at Rp40.3 trillion.
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