Surabaya bourse expects six firms to list this year
Surabaya bourse expects six firms to list this year
JAKARTA (JP): The Surabaya Stock Exchange (SSX) expects six small and medium scale companies to go public this year despite unfavorable market sentiment on small-size issues.
"We have told a number of small and medium scale companies about the simplified procedures for listing on the SSX and some of them have expressed their enthusiasm to go public this year," SSX general manager Anton Natakoesoemah told reporters here yesterday.
Anton said that no companies have taken advantage of the simplified procedures for initial public offerings introduced by the Capital Market Supervisory Agency (Bapepam) in 1994.
He cited a lack of familiarity with financial report preparations and legal status considerations as deterrents for small companies thinking of going public.
"Most are family-controlled companies which are not used to those two requirements," he said.
Small and medium companies, defined by Bapepam as having maximum total assets of Rp 20 billion (US$8.5 million), are allowed to raise up to Rp 7.5 billion through public offerings.
The regulation does not require share issuers to advertise their concise prospectuses or hire underwriters for their initial public offerings.
PT Sigma Batara director Ignasius Yonan told The Jakarta Post that small companies will only be accepted by the market if the base of domestic investors is strong enough.
"A securities company will never risk its business with a small issue," Ignasius said.
Similar to foreign securities firms, local securities companies sell stock to foreign investors.
He also argued that the SSX is inactive because most transactions there are not executed in Surabaya but on the Jakarta Stock Exchange (JSX) through cross transactions.
Agreement
Only 11 of the 199 companies on the SSX are listed on the basis of a single listing agreement. Eight of them were formerly listed on the Indonesian over-the-counter market (BPI), which was acquired by and integrated into the SSX in July 1995.
The other 188 companies are listed on the JSX and SSX under cross listing arrangements.
An SSX director, Helmy T. Ashwary, told the Post by phone from Surabaya yesterday that it will take time to bring small companies onto the exchange.
"I would say that our commitment as a bridging stock exchange must be viewed as an effort to educate small companies on how to become listed companies," Helmy said, adding that business considerations are somewhat different for small companies.
SSX regulations, according to Helmy, still allow companies with total losses of up to 25 percent of their paid-up capital to issue bonds, and allows those with losses of up to 40 percent to issue shares.
"So a small company should be assessed on its business prospects not on the size of its capital," he said. (08)