State asset fund Danantara plans to take several state-owned enterprises (SOEs) public in 2027, but whether the listings will attract investor interest remains uncertain. The companies have yet to be identified, and Danantara has pledged to conduct rigorous reviews before determining which are ready to enter the stock market. The key question, however, is whether the selected companies can offer sustainable returns and adequate investor protection, or whether the IPOs will serve primarily as a fundraising measure, leaving investors exposed to losses rather than potential capital gains, as previous cases suggest.

Danantara chief executive officer Rosan Roeslani announced that several SOEs under the fund’s control were being considered for initial public offerings (IPOs) on the Indonesia Stock Exchange (IDX) starting in 2027. The initiative aims to strengthen corporate governance and transparency by subjecting the companies to stricter regulatory oversight and greater public scrutiny from shareholders. Announced at an investor forum on Oct. 7, the plan covers SOEs operating in the finance, infrastructure, and mining sectors.

Danantara chief operating officer Dony Oskaria previously identified several potential IPO candidates, including pawnshop operator PT Pegadaian, fertilizer producer PT Pupuk Indonesia, airport operator PT Angkasa Pura Indonesia, which operates under the InJourney group, and port operator PT Pelabuhan Indonesia (Pelindo). The proposed listings form part of a five-year SOE transformation roadmap running through 2029, which encompasses consolidation, human resource development, technological advancement and competitiveness, value creation, and profit growth. As of 2026, 30 SOEs had been listed on the IDX, including Bank Mandiri (BMRI), PT Telkom Indonesia (TLKM), and PT Garuda Indonesia (GIAA).

The planned listings would end a three-year hiatus in SOE IPOs since Pertamina Geothermal Energy raised Rp 9.05 trillion (US$506.87 million) through its listing in February 2023. Danantara has outlined four stages that an SOE must undergo before entering the capital market: a fundamental business review, consolidation through mergers or restructuring, restructuring of the consolidated business model, and value creation. The IDX has welcomed the prospect of additional SOE listings and is developing a work plan that includes IPO targets, with the aim of expanding investment options for market participants.

However, analysts caution that state ownership alone is not enough to attract investors. Prospective shareholders will assess revenue growth, profitability, cash flow, debt structure, operational efficiency, and the sustainability of business performance after an IPO. Listings should also deliver improvements in corporate governance rather than simply generate funds. Transparency, the quality of prospectuses, and comprehensive disclosure of business risks will therefore be critical to building investor confidence.

These concerns are particularly relevant given the financial difficulties facing some SOEs. Four state-owned construction companies have had their shares suspended amid bond repayment problems, while PT Indofarma (INAF) faces the risk of delisting after its share price fell by 88.6 percent and remained at Rp 126 per share.

Indonesia’s track record with SOE IPOs offers reasons for caution. The November 2010 IPO of steelmaker PT Krakatau Steel (KRAS), for example, was marred by irregularities in the share allocation process. An audit by a public accounting firm found that five securities companies, namely Minna Padi, Samuel Securities, UOB Kay Hian Securities, Bapindo Bumi Securities, and Masindo Artha Securities had purchased a combined 980,000 shares, equivalent to 0.03 percent of the offering. Meanwhile, 68 parties subscribed twice for a total of 31.7 million shares, or approximately 1 percent of the offering. The Capital Market and Financial Institutions Supervisory Agency (Bapepam-LK) subsequently fined the five securities companies for administrative violations in their capacity as IPO selling agents.

Krakatau Steel’s subsequent operational and financial difficulties further illustrate the risks of investing in an SOE whose underlying business remains uncompetitive. By 2022, the company was burdened with more than US$2 billion in debt and a series of costly, underperforming projects. Its blast furnace, delayed by six years and completed in 2019 at a cost of US$682 million, was shut down in December of that year because its hot metal was uncompetitive.

The US$83.87 million Meratus Jaya plant also stalled and was eventually liquidated, prompting an Attorney General’s Office investigation into suspected corruption related to the project. Meanwhile, competition from cheaper Chinese steel imports and relocated induction-furnace mills pushed the company’s capacity utilization down to 40 percent. These problems underscore how capital-market access cannot compensate for weak project execution, poor investment decisions, or an uncompetitive business model.

The broader performance of SOE stocks also raises questions about whether IPOs have consistently delivered value to public investors. According to a report by Kontan, of 13 non-bank SOEs that went public from 2010 onward, only Pertamina Geothermal Energy, a subsidiary of Pertamina, maintained a share price above its IPO price. Subsidiaries of state-owned construction companies, including Wijaya Karya Beton and PP Properti, experienced some of the steepest declines.

Concerns have also emerged over alleged irregularities in pre-IPO share allocation. Analysts have pointed to sharp price surges on the first trading day, pronounced fluctuations during the first five trading days, price declines following the IPO lock-up period, and widening bid-ask spreads as potential warning signs of such practices.

Despite these pitfalls, SOE IPOs could help attract foreign investment, increase the market value of listed state-owned companies, and improve corporate transparency. Realizing these benefits, however, will require Danantara to treat public listings as part of a broader corporate transformation strategy rather than a means of monetizing state assets to meet immediate fiscal needs.

Political interference in corporate decision-making, including through the appointment and influence of directors and commissioners, must also be minimized to strengthen accountability to public shareholders. Furthermore, the IPO selection process should go beyond identifying companies large enough to list. Danantara must assess whether each candidate has a sustainable business model, credible growth prospects, and the capacity to generate returns without excessive reliance on government support.