Indonesian tech startups ditch blank-cheque deals for local listings

Indonesian startups SPAC
Image by Dzmitry Dzemidovich | Bigstockphoto

Following Bukalapak’s blockbuster IPO listing last month, other Indonesian tech startups have scrapped plans for overseas stock offerings in favour of going domestic.

Over the last year, local tech startups jumped on the SPAC bandwagon and begun talks with blank-cheque companies as part of their listing plans in the US.

The fall of SPACs came as fast as their rise. Compared to 299 SPAC flotations in the first three months of 2021, there were only 30 SPAC flotations in April and May. The US Securities and Exchange Commission (SEC) played a role in this, as they launched a major crackdown to protect retail investors.

In response to growing challenges abroad, Indonesian startups have decided that there are multiple opportunities closer to home, especially after Bukalapak’s blockbuster IPO.

This month, conglomerate MNC Group announced that it would abandon its attempt to go public in the US with blank-cheque company Malacca. Around the same time, unicorn Traveloka also announced that it will not pursue negotiations to list in the US through a merger with Bridgetown Holdings.

Indonesia is the Southeast Asian region’s biggest economy, and it also has the region’s most unicorns or privately held firms worth more than $1 billion. Many of these startups are now considering the Indonesia Stock Exchange (IDX) as a viable alternative to global IPOs.

IDX attempted the introduction of rules to encourage more local listings. These rules include dual-class shares that would give founders and existing investors more control of their businesses.

Muharsi Hasril, government regulations and regulatory affairs head, MNC Vision said that on top of the overcrowding SPAC market, their decision to go local is also inspired by the increasing enthusiasm of investors around IDX.

The move to go local suggests a windfall for foreign investors who are now flocking to Indonesia’s tech industry, as tech giants including Facebook, Microsoft, Alibaba, and Google actively seek investments in the local startup scene. Financial Services Authority Chairman Wimboh Santoso forecasts that the number of IPOs will increase in 2022 as more companies seek funding post-COVID. Both GoTo and PT Global Digital Niaga (Blibli) target a public listing in 2022. In the same year, Indonesia’s national energy company Pertamina plans to offer its units for sale.

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