17 March 2019

NOT many family/closed companies are willing to switch to a public company. Various considerations still haunt the company owners. Even though being a public company has many advantages. The following are excerpts of interviews with President Director of Mark Dynamics Indonesia (MARK), Ridwan Goh and President Director of Mahkota Group (MGRO), Usli Sarsi.

​Analisa: When deciding to change from a private company to a public company, what was the most difficult obstacle?​ 

Ridwan: The obstacle we faced was the process of fulfilling the requirements set by the Indonesia Stock Exchange (IDX). Incidentally, this company is owned by one person, so it is easier. To fulfill the requirements is actually not difficult, considering that the financial statements when it was still a family company/closed were quite good. In addition, from the business prospects of the last five years, the audit results are also good, as well as from a legal point of view, they are also considered good. Even if there are not too many improvements, so it does not take long, about 1 year.

Usli: The most difficult obstacle is equalizing the views of each owner, especially those with family backgrounds. This difference in view often causes the process of going public to be delayed. This is because the understanding of a public company is still minimal, so there is discomfort in the company owner. The inconvenience arises because the company owner can do whatever he wants with his company, but after becoming a public company, he can no longer, because there is already supervision and there are still a number of other inconveniences.

In order to create a single understanding of public companies, steps are taken by inviting related parties who are experts in the field of public companies, such as the stock exchange, securities, OJK, and so on. Another obstacle is generally the bookkeeping of financial statements of more than one family/closed company and other administrative requirements that are required to switch to a public company.

Analisa: In general, the main purpose of switching from closed to open is to raise capital. Is this true?

Ridwan: It's not always about getting capital, but it's also about getting branding to be more widely known. Indeed, when we decided to IPO, the company was going to expand. But the capital taken from the public was only around IDR 40 billion. Actually, at that time, IDR 40 billion was not enough for expansion, so we still had to use our own funds, our cash profit. The company's goal in conducting an IPO is to be recognized by the public for business partners and to provide opportunities for the company's partners to invest.

Usli: To raise capital, that's probably one of them. Indeed, doing an IPO provides additional capital. If you have to borrow from the bank, of course there are many requirements, besides that the loan must be returned. Meanwhile, it is not necessarily additional capital that can be immediately profitable. One way to raise capital is through an IPO, but that is not the main goal.

Analisa: There is some fear that in public companies the owners are not authorized to run the company?

Ridwan: When a company decides to IPO, in general, the largest shareholder is still the owner of the company. This company only released 21 percent of its shares. Therefore, the policy is still held by the largest shareholder, although it does not mean ignoring minority shareholders. The policy of the largest shareholder, of course, is not arbitrary because in a public company there are many people who supervise, there are independent commissioners, independent directors, OJK, the Stock Exchange, and so on.

Usli: Not really. In general, the owner of a family/closed company is still the dominant shareholder, so the company's policy is still with the largest shareholder. The difference is that in family/closed companies, no outsiders are included in the highest management, but after opening, there are independent commissioners, independent directors who come from outside.

Analisa: What are the advantages of being a public company?

Ridwan: The advantage is that indirectly you will do better and have nothing to hide. The company's system refers to a predetermined standard. Another advantage is that the company gets more funds. During the IPO, the company released 760 million shares. Now with the stock price rising, the company went through a stock split so that the number of shares became 5 times (IDR 3.8 billion) shares. If you look at the share price, the company is worth IDR 2 trillion, while the assets owned are around IDR 300 billion.

Usli: A lot of things. After the IPO, the company is more open and everyone can know the company's performance. There is no longer anything that has to be closed to the public. That way there is no more suspicion from various parties to the company, including regarding taxes.

Analisa: How did the company do after the IPO? 

Ridwan: In the future, we will continue to develop Dalu X, Tanjung Morawa, Deli Serdang to increase production capacity. This is because demand is higher than production capability.

Usli: Of course, after the company becomes public we will continue to expand. One of them is by opening a cooking oil factory and palm oil derivatives. (fahrin malau)

Source : ​http://harian.analisadaily.com/jentera/news/perusahaan-terbuka-lebih-menguntungkan/708805/2019/03/17