2024 has been an exciting year for the capital markets, especially in the realm of Initial Public Offerings (IPOs). Following a period of global market uncertainty caused by the pandemic and political tensions, the global capital markets are showing signs of recovery. Several companies from various sectors have chosen to go public this year.
The journey to taking a company public or securing investment in the capital markets today presents unique challenges, especially as investor preferences continue to evolve. In the recent event of Deloitte X IDX: IPO Readiness: Taking Control of Your Journey, where Oki Ramadhana, President Director of Mandiri Sekuritas, was a speaker, it was revealed that before the Covid-19 pandemic, investors largely favored traditional sectors such as banking, consumer goods, and infrastructure. These sectors reflected the broader structure of Indonesia’s economy, with a focus on growth drivers that exhibited relatively low volatility. Although interest in technology was emerging, attention to this sector was still limited.
However, the pandemic has shifted the investor appetite. Global economic uncertainty drove many investors to seek safer assets, such as government bonds, as government intervention provided stabilizing effects. The rise of retail investors, fueled by lockdown policies and the growth of digital trading platforms, made the healthcare and technology sectors increasingly attractive. These two sectors experienced a surge as the world responded to the pandemic, capturing the interest of a new generation of investors, particularly Millennials and Gen Z.
This upward trend continued, and by 2024, the number of retail investors in Indonesia had soared to approximately 13 million, a sharp increase from 1.2 million at the end of 2019.
As we entered the post-pandemic era, technology remains a central focus for investors. Digitalization has reshaped commerce and financial solutions, while sustainability has become an increasingly important consideration. ESG (Environmental, Social, and Governance) factors are now seen as a critical part of a company’s narrative, as investors grow more conscious of sustainability in their future investment decisions."
Sectoral Trends in 2024
Despite market activity contracting in the first semester of 2024, sectors such as energy, basic materials, consumer businesses, and household products demonstrated their strength. Several notable IPOs took place in 2024, including Ancara Logistics in the energy sector, Adhi Kartiko Pratama in basic materials, and Terang Dunia Internusa in consumer businesses.
The banking, energy, healthcare, and consumer sectors consistently contributed significantly to trading volume and value on the IDX, with healthcare and energy sectors, in particular, showing sustained interest. Although merger and acquisition (M&A) activity in the banking sector has slowed down, energy and healthcare remain key sectors for both public and private markets.
AI, Technology & ESG
Technological advancements such as artificial intelligence (AI), cloud computing, big data analytics and blockchain have emerged as key players in reshaping the IPO process. These technologies offer solutions for managing large volumes of data, ensuring regulatory compliance, and enhancing the overall investor experience. Companies adopting these technologies tend to show faster growth, reach new markets, achieve cost efficiencies, and strengthen their value proposition, ultimately boosting their IPO valuations.
On the ESG front, investors are increasingly seeking companies that integrate sustainability into their core strategies. According to a study by White & Case, a New York-based law firm, 70% of academic studies show a positive correlation between high ESG scores and better financial performance. For companies considering an IPO, demonstrating a strong commitment to ESG—from climate change mitigation initiatives to promoting diversity at the board and management levels—can enhance their appeal to investors.
Key Considerations for Companies When Raising Funds
During the event, several important steps for companies seeking to raise funds were highlighted, including:
- Determine the appropriate capital structure, cost of capital, timing, and tailored strategic considerations.
- Prepare a solid growth story, along with its implementation plan, covering a broad perspective of strategy, market opportunities, financials, competitive advantages, risk management, and sustainability.
- Validate the growth story to justify value by:
- Aligning projected revenue with the necessary costs and investments
- Establishing risk mitigation strategies
- Adjusting knowledge methodology
- Approaching the right type of investors aligned with the desired fundraising requirements.
It’s important to remember that an IPO is always one of the most effective ways to raise funds, boosting the company’s potential for sustainable growth if all aspects are well-prepared. IPO preparation is highly detailed, as it involves various capital market regulations, time, and expert resources to ensure a smooth and effective process. In the current "wait-and-see" period following the Indonesian elections, it is best to to start to prepare for IPO, seek advice from experts, while identifying the right timing for an IPO
