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From record-breaking oversubscriptions to back-to-back trading halts, IPOs in Indonesia are hotter than ever.

In just the first half of July, eight new listed companies have gone public on the Indonesian Stock Exchange (IDX), collectively raising over $200 million. Among them. PT Chandra Daya Investasi Tbk (CDIA.JK) captured strong investor interest, with it being oversubscribed by over 560x.

Before diving into what is fueling this IPO craze, we must understand how the Initial Public Offering (IPO) process works.

IPO Mechanics

When a private company wants to raise funds for operations. They could issue shares to the public markets, through an IPO. Typically, companies have to go through a structured process that involves underwriters and/or investment banks.

One of the first steps a company needs to go through throughout this process is to appoint an underwriter, usually a securities company or investment bank. An underwriter serves as an intermediary between the company seeking to issue shares to the public and investors. In short, underwriters are responsible for the marketing and pricing of the IPO.

Next, after filing a prospectus and getting approval, the company enters the book building process. The book building process, usually 1-3 weeks long, is where investors bid for the offered shares.

Then comes the allotment stage, where final shares allocation results are announced and distributed. In the case when demand for a company’s share exceeds the number of shares offered or is oversubscribed, shares are typically allocated proportionally.

Once listed, the stock now trades on the open markets.

Addressing the Enthusiasm

In 2025 alone, investors in Indonesia increased by 2,14 million from 14.87 million at the end of 2024. This number, however, is still relatively low for Indonesia’s nearly 300 million population.

For many of these investors, IPO stock are seen as a golden opportunity — one that can bring quick upside.

This mindset is largely driven by the success stories of recent IPOs that surged on their first trading days, often hitting their upper auto rejection limits (ARA) multiple days in a row. Even with small capital, investors can almost double their investments from just a three-day ARA streak. As a result, IPOs are often treated as ‘money grabs’ less than as long-term investments into freshly listed companies.

Social media platforms and online forums have further amplified this behavior by promoting going ‘all in’ in these IPOs, to maximize allotment and potential upside.

Risk Behind IPO Stocks

While IPOs may seem as very lucrative opportunities to dabble into, they come with risks that are often overlooked by investors.

One key risk lies in their lack of operational history. With a lack of track record, investor have fewer data points to analyze and build a solid investment thesis on. Unlike already established companies, IPO candidates typically only offer their prospectus as a primary source of information.

That said, the prospectus also includes a section detailing risk factors, which can provide valuable insight into the potential challenges the company might face. This makes it especially crucial for investors to see beyond the hype and understand the fundamentals of the company.

End Note: Boom or Bubble?

IPOs surely can be exiting and rewarding. But, it also comes with real risks. Seeing through the hype and FOMO is very much important when dealing with these ‘fresh’ stocks.

That said, it is encouraging to witness the growing enthusiasm in Indonesia’s capital markets. The increase in market participation goes to show that Indonesia is at a turning point headed towards greater financial awareness and also a more efficient market.

If this momentum carries on with an informed and wise attitude, then the IPO boom may a step forward in Indonesia’s capital markets.