What regulatory steps and approvals are needed for a private equity deal in Indonesia as a buyer?

Hello

When selling a stake to a private equity firm in Indonesia, you will need to navigate the regulatory requirements of both the Financial Services Authority (OJK) and the Investment Coordinating Board (BKPM). The process involves specific approvals, comprehensive due diligence, and adherence to set timelines and capital requirements.​

Regulatory Approvals
OJK (Financial Services Authority)​

For private equity transactions, which are often structured as private placements, the OJK has specific regulations that must be followed. Key requirements include:​

Documentation Submission: The issuer must submit all transaction documentation to the OJK at least 30 calendar days before the securities are issued.​

Professional Investors: The securities can only be purchased by "Professional Investors" as defined by the OJK, and these investors must provide a confirmation of their status.​

Licensed Parties: Only securities brokers licensed by the OJK can act as arranging banks or private placement agents. A monitoring agent, also licensed by the OJK, must represent the security holders.​

Disclosure and Announcements: The company must disclose information about the private placement to shareholders, hold a General Meeting of Shareholders (GMS) for approval, and make public announcements before and after the placement.​

BKPM (Investment Coordinating Board)​

The BKPM regulates foreign investment in Indonesia, and its requirements are crucial for private equity deals involving foreign firms. A significant recent development is BKPM Regulation No. 5 of 2025, which has eased some of the rules for foreign investment companies (PT PMA).​

Minimum Investment and Paid-Up Capital: The minimum investment for a PT PMA remains over IDR 10 billion per business activity, but the minimum paid-up capital has been reduced from IDR 10 billion to IDR 2.5 billion. This IDR 2.5 billion must be deposited as cash and remain in the company's bank account for 12 months unless used for capital expenditure or working capital.​

Licensing: Foreign private equity firms must obtain a Business Identification Number (NIB) and a license to conduct commercial activities through the Online Single Submission (OSS) system.​

Project Completion: Investment projects must be completed within three years, with a possible extension of up to three more years.​

Due Diligence
A thorough due diligence process is essential for a successful private equity transaction in Indonesia. The process typically covers the following areas:​

Financial Due Diligence: This involves a detailed review of the company's past and present financial statements, cash flow, debt, and financial forecasts.​

Legal Due Diligence: This includes reviewing contracts, ensuring legal and regulatory compliance, checking for any ongoing litigation, and verifying ownership rights. In Indonesia, this also involves a close look at corporate documents and licenses.​

Operational Due Diligence: This part of the process examines the company's internal processes, supply chain, technology, and overall operational efficiency.​

Tax Due Diligence: A comprehensive review of the company's tax status, obligations, and potential exposures is critical, as tax issues can significantly impact the deal's success.​

Management and Cultural Due Diligence: Assessing the experience and track record of the management team is a key step. In Indonesia, where many businesses are family-owned, understanding the local business culture and the influence of relationships is crucial for a smooth transition and successful partnership.​

Timelines and Costs
Timelines

OJK Filing: Transaction documentation must be submitted to the OJK at least 30 days before the private placement. The overall process involves several steps, including a GMS, which will add to the timeline.​

BKPM Project Completion: The investment project must be completed within three years, with a possible extension.​

Private Placement Announcements: Public announcements must be made at least five working days before the private placement and within two working days after its completion.​

Costs

Minimum Capital: The most significant initial cost is the minimum paid-up capital of IDR 2.5 billion required by the BKPM for a foreign investment company.​

Professional Fees: Legal and financial advisory fees for navigating the complex regulatory landscape and conducting thorough due diligence will be a substantial part of the overall cost.​

Regulatory Fees: There will be costs associated with filings and obtaining licenses from the OJK and BKPM.