Dentons HPRP, a leading law firm in Indonesia, has successfully facilitated the third issuance of structured warrants in Indonesia for PT CGS-CIMB Sekuritas Indonesia (“CGS-CIMB”). This groundbreaking endeavour reached a remarkable milestone with a total issuance valued at Rp60 trillion. The structured warrants, featuring both Call – European Style and Put – European Style options, were designed for settlement in cash, showcasing the adaptability of this innovative financial instrument.

Led by Partner, Fabiola Hutagalung, Senior Associate, Rio Febrianus Pasaribu, and Associates Aletheia Christy Hutabarat, Shevanya Putri Kinanti, and Devandra Maula Zakki, Dentons HPRP’s collaborative efforts with CGS-CIMB garnered official approval from the Financial Service Authority (Otoritas Jasa Keuangan or “OJK”), as evidenced by the effective statement issued on 22 January 2024. This official endorsement not only validated the legitimacy of the initiative but also served as a testament to CGS-CIMB's unwavering commitment to driving innovation and advancement within the dynamic landscape of the financial industry.

In its capacity as the legal consultant for CGS-CIMB, Dentons HPRP’s roles involve comprehensive legal due diligence, coordination with regulatory authorities, including OJK and the Indonesian Stock Exchange, ensuring strict compliance with regulatory frameworks. The team also provides insightful advice on corporate documentation, drafting the skeleton of the prospectus, overseeing licensing requirements, and ensuring adherence to compliance standards. By doing so, Dentons HPRP guarantee that all facets of corporate governance align harmoniously with applicable laws and regulations, safeguarding the integrity of CGS-CIMB's business activities throughout the issuance process.

The CGS-CIMB's strategic decision to issue structured warrants is grounded in the acknowledgement of the advantages associated with these financial instruments. According to CGS-CIMB , investing in structured warrants offers a spectrum of advantages, which include:

1. Cost Efficiency
   Unlocking the potential for elevated profits with a modest initial investment, leveraging the dynamic movements of underlying stocks without the need for direct ownership of the asset. This cost-effective approach allows investors to maximize returns while minimizing the initial capital outlay, providing a strategic and resource-efficient avenue for market participation.
2. High Profit Potential
   The prospect of significant profits materializes when the market movements correspond to the foresight and analysis of investors. This dynamic nature of high-profit potential adds an element to strategic investment, amplifying the allure of informed decision-making in the financial realm.
3. Quantifiable Risk
   Structured Warrants offer investors a clear and measurable risk profile, with the maximum potential loss limited to the amount of premium initially paid. This transparent risk assessment empowers investors with precise insights into their financial exposure, fostering a comprehensive understanding of potential downsides. The capped risk, defined by the premium, enables investors to make informed decisions, aligning their risk tolerance with calculated financial strategies.
4. Guaranteed Liquidity
   The market's liquidity is safeguarded through designated publishers who are entrusted with the responsibility of consistently providing quotes. These specialized entities play a crucial role in ensuring a fluid and efficient market by facilitating the ongoing availability of buy and sell prices. This commitment to guaranteed liquidity serves as a cornerstone, fostering a reliable and responsive environment for investors to execute transactions with confidence and ease.
5. Efficient Cash Settlement Mechanism
   The cash settlement feature in structured warrants is designed to streamline the process for warrant holders. Upon exercising their warrants, holders receive payment reflecting the difference between the market price and the exercise price. This eliminates the necessity for warrant holders to allocate additional funds for exchanging the underlying asset, a factor that could potentially dilute their financial position. The inherent flexibility in this cash settlement mechanism empowers warrant holders to capitalize on the dynamic price movements of the underlying asset without the burden of additional financial commitments, enhancing their strategic movements in the market.

Dentons HPRP played an instrumental role in pioneering the introduction of structured warrants in Indonesia, which serves as a testament to its dedication to financial innovation. The team proudly assisted RHB Indonesia in securing the effective letter from the OJK on 1 September  2022, marking a historic moment. RHB Indonesia, under our guidance, successfully executed the inaugural issuance of structured warrants in Indonesia, boasting an impressive total value of Rp20 trillion. This landmark transaction, acknowledged for its excellence, was honored with the Equity Market of the Year award at the ALB Indonesia Law Awards 2023 by ALB Thomson Reuters.

This series of successful structured warrant issuances reinforces Dentons HPRP’s standing as a key facilitator of transformative financial instruments in Indonesia. For inquiries regarding the service provided, please contact the Partner under the Key Contact.

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