Indonesia's First Ever IPO by a Startup Draws Robust Investor Interest

Indonesian shares closed at a record high on Thursday (21/12), bouncing back from a drop in the previous session, after Fitch raised the country's credit ratings to their second lowest investment grade. (Antara Photo/Akbar Nugroho Gumay)

By : Eveline Danubrata | on 1:47 PM October 05, 2017
Category : Business, Markets

Jakarta. E-commerce firm Kioson Komersial Indonesia drew strong investor interest for the country's first ever initial public offering by a startup, and its shares surged on their trading debut in very thin volumes on Thursday (05/10).

The response to the IPO could potentially pave the way for more technology companies in Southeast Asia's biggest economy to follow in Kioson's footsteps and list in the domestic stock market.

Kioson raised Rp 45 billion ($3.3 million) by selling 150 million shares, or 23.1 percent of the company's total share base, at Rp 300 apiece. The offering was more than 10 times oversubscribed.

The stock surged as much as 50 percent on its debut, but volumes were very thin with just over 10,000 shares traded.

Indonesia's startup scene is booming as investors are lured by the youthful demographic of the country of more than 250 million people, who are increasingly buying anything from tickets to electronic gadgets online.

President Joko "Jokowi" Widodo has also aimed to increase broadband access in the sprawling archipelago.

Kioson chief executive Jasin Halim said the company previously received offers from venture capital and private equity funds, but decided to go for an IPO because of a difference in valuation.

"The path that startups take is normally to look for venture capital, angel investors and so on...We feel that by taking the IPO route, that's the method that is the most fair and transparent," he told reporters. "Let the market value our company."

On top of showing that an IPO could be an alternative method to raise funds for startups in Indonesia, Kioson also offers retail investors a chance to take part in the capital market and benefit from the "hyper-growth" of startups, Jasim said.

Kioson operates an "online to offline" business model, which allows customers to make online purchases and pick up their orders at the ubiquitous kiosks, locally known as warung, across Indonesia.

The company had tied up with 19,000 kiosks as of September, and plans to raise that to 100,000 by 2019, Halim said. Kioson plans to use the proceeds from its IPO mainly to acquire online vouchers firm Narindo Solusi Komunikasi.

Andi Boediman, co-founder of venture capital firm Ideosource, told Reuters he expects more startups to take the IPO route in Indonesia as they could get better valuations from local investors who are more familiar with their products.

"With products that are offered in Indonesia, it's easier to build a positive perception in Indonesia than to introduce it in other countries," said Andi, whose venture capital firm had invested in online retailer Bhinneka Mentari Dimensi.

M Cash Integrasi, which distributes online vouchers through its physical kiosks, is also planning to raise up to Rp 300 billion by offering a 25 percent stake in an IPO. M Cash is a unit of Kresna Graha Investama.

Reuters

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