UPDATE 1-Indonesia bourse says firms must float at least 7.5 pct

Thu Jan 23, 2014 7:11am EST

(Adds details, fund manager comments)
    By Fathiyah Dahrul and Andjarsari Paramaditha
    JAKARTA, Jan 23 (Reuters) - Indonesia's stock exchange
 required companies to make shares amounting to at least
7.5 percent of their paid-up capital available to the public, in
a bid to increase market liquidity and trading volumes.
    The new rule, effective from Jan. 30, will give listed
companies two years to comply, the stock exchange said on
Thursday.
    "The regulation should also be good for corporate governance
because a higher percentage of floating shares will attract more
attention from minority shareholders," said Jemmy Paul, head of
investment at Jakarta-based Sucorinvest Asset Management.
    Companies that are likely to be affected include cigarette
maker Hanjaya Mandala Sampoerna and lender Bank CIMB
Niaga. 
    HM Sampoerna's main shareholder, New York-listed Philip
Morris International owns 98.2 percent, while CIMB Niaga
is 96.9 percent-owned by Malaysian-based CIMB Group,
companies said in exchange filings.
    "Companies like BNGA or HMSP have to decide either on going
private, making a rights issue or making a share placement. I
think going private is the least preferred," Paul said.
    The exchange is also raising the free-float requirements for
companies planning an initial public offering (IPO). The
following table shows the details :         
 Equity valuation                 Free-float size
 less than 500 bln rupiah         20 percent
 500 bln to 2 trln rupiah         15 percent
 more than 2 trln rupiah          10 percent
    Last month, Indonesia's stock exchange reduced trading sizes
to 100 shares per lot and increased the maximum volumes on
orders, effective Jan. 6. 
    The Jakarta Composite index has risen 5 percent so
far this year, making it the second-best performing market in
Southeast Asia after Vietnam.

 (editing by Jane Baird)