A Rights Issue Sometimes Comes With a Free Waran Attached. Here's What That Actually Gives You
6 min read
Loading...
6 min read
You exercised a rights issue, and now there is a second line item sitting in your brokerage account: a waran, sometimes hundreds of them, and you never paid anything extra for it. That can feel like a bonus, or it can feel like a trick. It is neither. It is a separate security with its own rules, and whether it is ever worth anything depends entirely on where the stock trades later, not on the rights issue you already went through.
A waran (warrant) is a security that gives you the right, not the obligation, to buy one new share directly from the company at a fixed exercise price, any time before a set expiry date. It is not the same thing as the rights (HMETD) from a rights issue, which only let you buy shares in that one specific offering, in a window that closes in days. A waran's window can run for years, and the company only gets your money, and only issues the new share, if you actually choose to exercise it before it expires.
When an Indonesian company bundles waran into a rights issue, it is a sweetener: buy the new shares now, and the company throws in extra, tradable options to buy even more shares later, at a price fixed today.
The ratio is always spelled out in the rights issue prospectus, and it varies by company. A real example makes the mechanics concrete.
PT Bumi Resources Minerals Tbk (BRMS) ran two rights issues in 2021 that both bundled in free waran, and both used the same exercise price:
Both rounds are documented in the company's own rights issue schedules, reported by Britama and confirmed separately by Investor.id, which both name the same Rp70 exercise price for the second round.
BRMS's Rp70 warrants show what happens when the stock genuinely gets there. The company's gold processing operation in Sulawesi ramped up sharply, and by late December 2023, Bareksa's own trading desk had BRMS in a trading-buy range of Rp168 to Rp173 per share, more than double the Rp70 exercise price.
At that price, exercising a warrant meant paying Rp70 for a share worth over Rp168, an immediate paper gain of over 100% on the exercise price alone, before whatever the holder originally paid to acquire the warrant itself. That is a warrant deep in the money.
This is the part a rights issue itself cannot do to you, but a waran can. Say a hypothetical company, "PT Contoh Tbk," bundles a waran with an exercise price of Rp500, expiring in two years. If the stock trades at Rp350 for the entire two years and never once closes above Rp500 before expiry, the waran expires worthless, whether the stock sat at Rp499 or Rp100 on the day it lapsed.
The reason is simple: nobody exercises a right to buy a share for Rp500 when the market will sell them the same share for Rp350. The warrant's only value comes from the gap between the stock price and the exercise price, and if that gap never turns positive before expiry, the gap is worth exactly nothing.
This is a real, structural difference from the rights issue that came with it:
| The Rights (HMETD) | The Waran | |
|---|---|---|
| What it lets you do | Buy new shares in that one rights issue | Buy more shares later, at today's fixed price |
| How long you have | Days, the rights-trading window only | Months to years, per the company's own schedule |
| When it is worth nothing | Almost never at issuance, since the exercise price is set below the pre-issue market price | Whenever the stock price sits below the exercise price at expiry, which happens often |
A rights issue's exercise price is deliberately set at a discount to the current market price on day one, which is why the rights themselves are rarely worthless the moment they are issued. A waran's exercise price is fixed at issuance too, but the stock then has to actually get there, and stay there, months or years later. Nothing forces that to happen.
Every waran's own exercise price and its exercise-window schedule are set out in that company's rights issue prospectus, not in a general rule that applies to every waran on IDX. IDX-listed waran can also carry periodic exercise windows rather than a single expiry date, so check the specific dates the issuer published rather than assuming a one-time deadline.
Check where a stock is actually trading right now against any waran's exercise price on NetWort's ticker directory, which lists every IDX stock the platform tracks alongside its current price. BRMS's own asset page is a real example you can look at today, well past the Rp70 level that made its 2021 warrants valuable.