The Indonesia Stock Exchange (IDX) is gearing up for a marathon of right issue corporate actions, also known as Pre-emptive Rights (HMETD). This move aligns with investors’ needs to inject additional capital. As of today, Thursday, November 20, 2025, at least eight issuers have already planned substantial right issues. The number of HMETD actions is projected to increase sharply in 2026, driven by the IDX’s plan to raise the free float share threshold to 10%, eventually reaching 25%.
According to MNC Sekuritas, HMETD is one of the primary methods for listed companies on the Indonesia Stock Exchange to raise funds. Simply put, a company issues new shares and offers existing shareholders the first opportunity to purchase these shares before they are made available to other parties. The common objectives of a right issue typically include increasing working capital, financing expansion projects, or restructuring existing debt.
How does the HMETD mechanism operate? Companies typically establish a ratio, such as 1:20, meaning that for every one existing share held, a shareholder gains the right to purchase 20 new shares. The price of these new shares (the right price) can be lower than, equal to, or even higher than the prevailing market price. Shareholders then have several strategic options for these pre-emptive rights: they can exercise their rights, sell these rights in the market, or allow them to lapse, thereby risking dilution of their ownership.
So, what critical information about right issues should investors be aware of?
One significant advantage is the opportunity to buy at a discounted price. If the right price is lower than the market price and the company’s prospects are favorable, purchasing through a right issue can offer considerable potential for profit.
Another key benefit is the ability to maintain ownership percentage. By exercising their rights, an investor can prevent their percentage of ownership from being diluted when new shares are issued, thereby preserving their influence and stake in the company.
Furthermore, the liquidity of rights provides flexibility. Subscription rights can be traded on both cash and online markets, allowing investors who do not wish to inject additional capital to still realize value from the rights they possess.
However, investors must also be mindful of the risks and potential losses associated with right issues.
A primary concern is ownership dilution. If a shareholder opts not to exercise and also fails to sell their rights, their ownership percentage will inevitably shrink due to the increased number of outstanding shares.
Moreover, a right issue can sometimes be interpreted as a signal of a company’s condition, indicating an urgent need for funds. This could signal financial pressure, which carries the risk of a decline in the company’s share price.
There is also the potential for a price decrease. The issuance of new shares increases the overall supply in the market; if the market perceives the corporate action as less promising, the share price could fall.
Lastly, the complexity of valuing rights poses a challenge. Determining whether the right price is more advantageous than purchasing shares directly from the market requires thorough analysis, including examining the intended use of funds, the company’s valuation, and its business plans.
Therefore, before deciding whether to exercise or decline new shares, investors should undertake several crucial steps:
Firstly, read the prospectus or official announcement diligently. It is essential to verify the purpose for which the funds will be used, ascertaining whether it is for value-added expansion or merely to cover losses.
Secondly, conduct a thorough fundamental analysis. Review the company’s financial health, cash flow, and business prospects meticulously before committing to exercise your rights.
Thirdly, consider your ownership strategy. If maintaining influence or voting rights is a priority, exercising your rights may be the appropriate decision. Conversely, if not, selling the rights in the market could be an alternative way to realize their value.
Finally, do not rush into a decision. Utilize the offering period to carefully calculate projections; if any doubts persist, consult a qualified financial advisor or broker.
Ultimately, a right issue is not automatically beneficial or detrimental. Its advantages hinge on the right price, the intended use of the raised funds, and the company’s fundamental condition. For diligent investors who grasp the corporate context, a right issue can present a valuable opportunity. However, for those who overlook careful analysis, the risks of dilution and value erosion could lead to significant losses.
Summary
A “right issue,” also known as Pre-emptive Rights (HMETD), is a corporate action where companies offer new shares primarily to their existing shareholders to raise additional capital. This mechanism allows shareholders to purchase new shares at a specified “right price” according to a predetermined ratio, often for purposes like increasing working capital or financing expansion. Key benefits for investors include the potential to buy shares at a discounted price, maintain their ownership percentage, and the liquidity to trade their subscription rights.
However, investors must be aware of potential risks such as ownership dilution if rights are not exercised or sold. A right issue can also signal a company’s urgent need for funds, potentially leading to a decrease in share price. Before acting, investors should diligently read the prospectus, conduct thorough fundamental analysis, and consider their ownership strategy, as the overall benefit depends on the “right price,” the use of funds, and the company’s financial health.
