Shares in the Indonesian geothermal power plant operator BREN surged after the company’s Indonesian Stock Exchange debut yesterday (Monday).
The company says it’ll use the $200M it raised to repay debt, buy geothermal plants in Java, and expand into other renewable technologies.
Indonesia’s initial public offering (IPO) space has been hot this year. It raised $2.8B in the first half of 2023, behind only China, the US, and UAE. That places Indonesia ahead of much larger economies like India and Japan.
Stay on top of your world from inside your inbox.
Subscribe for free today and receive way much more insights.
Trusted by 123,000+ subscribers
No spam. No noise. Unsubscribe any time.
So, what’s going on?
Two things: investors are attracted to Indonesia’s strong economic and demographic fundamentals; and that’s dovetailing with a broader green energy transition.
- ⛏️ Five of the year’s six Indonesian IPOs that’ve crossed the $100M mark are connected either to renewable energy or key inputs
- 🌋 President Widodo introduced incentives last year to develop Indonesia’s vast geothermal potential (the world’s largest)
- ✍️ He’s moved to position Indonesia as a key link in the world’s EV supply chain, including through a partnership with Australia, and
- 🔋 Jakarta has banned the export of its nickel ore (the world’s largest reserves), forcing processors and manufacturers to invest locally.
Intrigue’s take: Intriguingly, this local IPO boom is happening against a cooling backdrop: the global IPO market has seen a 32% decrease year-on-year as it still comes down from its record 2021, responding to higher interest rates and an uncertain economic outlook.
So there’s an interesting market signal at play here: as investors look for returns, emerging market exposure, energy transition exposure, and manageable risk, some Indonesian stocks seem to be ticking the boxes.
Also worth noting:
- Coal accounted for over 60% of Indonesia’s energy mix in 2022. Indonesia has a 2060 net-zero target.
- The BREN share offering was oversubscribed by 135 times.
- BREN is owned by Indonesian billionaire Prajogo Pangestu.
