Key Takeaways
- • Danantara, Indonesia's sovereign wealth fund, has submitted a bid to buy a stake in the Indonesia Stock Exchange (IDX), IDX chief executive Jeffrey Hendrik said on Wednesday, without disclosing the proposal's terms.
- • The IDX is preparing for demutualisation, which would convert it from a member-controlled, self-regulating organisation into a shareholder-owned, for-profit company; the process has been mandated by law since 2023.
- • Local media reports suggest Danantara may take a 40% stake in the IDX; a September rule from the financial services authority allows Danantara, the finance ministry and the central bank to hold shares, with a 50% cap on any single holder.
- • The move comes as Indonesian equities face renewed pressure after MSCI warned it could downgrade Indonesia to "standalone" status, and the main stock index is down about 40% year to date, the world's worst-performing equity market.
Summary
Indonesia's sovereign wealth fund Danantara has submitted a bid to acquire a stake in the Indonesia Stock Exchange (IDX), according to the exchange's chief executive, Jeffrey Hendrik, who spoke to reporters on Wednesday. Hendrik said the proposal is under consideration while the exchange awaits bids from other parties, but he did not provide details of the offer.
The bid comes as the IDX prepares for demutualisation. Authorities accelerated the process after MSCI's first downgrade warning for Indonesia's equity market in January. Demutualisation would transform the exchange from a member-controlled, self-regulating body into a shareholder-owned, for-profit company. Although the process has been mandated by law since 2023, it has been slow, partly because of disputes over who would become the controlling shareholder. Authorities say the change will bring the exchange in line with regional peers and improve governance.
Pressure on Indonesian assets has intensified. MSCI this month surprisingly said it could downgrade Indonesia's equity market to "standalone" status, a more severe warning than its January caution. The rupiah is trading near its record low, and the main stock index fell 1.65% at midday on Wednesday, extending year-to-date losses to about 40%, which Reuters reports makes it the world's worst-performing equity market.
Danantara, launched by President Prabowo Subianto in February of last year, may take a 40% stake in the IDX according to local media reports. Under a rule issued in September by Indonesia's financial services authority, Danantara, the finance ministry and the central bank may all hold shares in the exchange, and any single holder is capped at 50% ownership. Hendrik said neither the finance ministry nor the central bank has made an offer, but the IDX remains open to new bidders. He added that the exchange would issue new shares to accommodate its new stakeholders, with an initial public offering to follow at a later date.
The bid comes as the IDX prepares for demutualisation. Authorities accelerated the process after MSCI's first downgrade warning for Indonesia's equity market in January. Demutualisation would transform the exchange from a member-controlled, self-regulating body into a shareholder-owned, for-profit company. Although the process has been mandated by law since 2023, it has been slow, partly because of disputes over who would become the controlling shareholder. Authorities say the change will bring the exchange in line with regional peers and improve governance.
Pressure on Indonesian assets has intensified. MSCI this month surprisingly said it could downgrade Indonesia's equity market to "standalone" status, a more severe warning than its January caution. The rupiah is trading near its record low, and the main stock index fell 1.65% at midday on Wednesday, extending year-to-date losses to about 40%, which Reuters reports makes it the world's worst-performing equity market.
Danantara, launched by President Prabowo Subianto in February of last year, may take a 40% stake in the IDX according to local media reports. Under a rule issued in September by Indonesia's financial services authority, Danantara, the finance ministry and the central bank may all hold shares in the exchange, and any single holder is capped at 50% ownership. Hendrik said neither the finance ministry nor the central bank has made an offer, but the IDX remains open to new bidders. He added that the exchange would issue new shares to accommodate its new stakeholders, with an initial public offering to follow at a later date.
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