Backdoor Listing: How it Works, Features, and Benefits for Investors

Updated

January 24, 2026

Gambar Backdoor Listing: How it Works, Features, and Benefits for Investors

Jakarta, Pintu News – In the stock market, backdoor listing is one way for companies to enter the stock exchange without going through the lengthy and expensive traditionalinitial public offering (IPO) process. This strategy is often chosen by companies that want to be listed immediately on the stock exchange with relatively more efficient costs and time.

1. What is Backdoor Listing in Stocks?

Backdoor listing is a method by which a company enters the stock market bymerging with or taking over a company that is already listed on the stock exchange. In other words, an unlisted company can “infiltrate” the capital market through an existing public company.

This process is different from an IPO, where the company makes a new share offering to the public and has to go through many regulatory requirements. In a backdoor listing, a company obtains listed status by “taking over the slot” of an existing company.

This method is also known as a reverse takeover because the private company acts as the party taking over the public company, while the ultimate goal is for the private company itself to become a public company.

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2. How Backdoor Listing Works

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Broadly speaking, backdoor listing works through two main mechanisms:

Reverse Merger
In this process, a private company merges with an already listed public company. Once the merger is complete, the private company that becomes the ultimate controller will take over the structure of the public company.
Majority Share Acquisition
A private company can also buy a majority stake in a listed company. Once the majority of the shares have been acquired, the management and direction of the company can be restructured according to the needs of the private company.

Through these two mechanisms, private companies do not need to undergo a lengthy IPO process, such as the preparation of a prospectus, investor roadshows, and the pricing of new shares.

3. Characteristics of Backdoor Listing Shares

Stocks that experience a backdoor listing usually exhibit the following characteristics:

Name and Stock Code Changes
Once the process is complete, the code and name of the public company will usually change to follow the private company that takes it over.
Spike in Trading Volume
Stock movements often become more active, especially when investors start reacting to listing news and new business prospects.
Changes in Ownership Structure
The majority stake is initially owned by a private group that takes over, then changes as shares are offered to the public or other investors come in.
New Governance Report and Financial Statements
Companies that do a backdoor listing will release new financial statements and management structures, so that investors can assess their actual operational prospects.

4. Benefits of Backdoor Listing for Investors

Investors can take a number of advantages from backdoor listing companies, including:

Opportunity for Faster Access to Emerging Companies
Companies that enter through backdoor listing are usually mature private entities that are ready to expand, so investors get opportunities in the early stages of growth.
Faster Stock Liquidity
Since the company is already in the capital market, investors can buy and sell shares more easily than waiting for the long IPO process.
Clearer Information and Governance
Once officially listed, companies are required to comply with reporting and corporate governance standards, providing investors with greater transparency of information.
Attractive Price Action Potential
News of listings and management changes often trigger buying interest in the market, so share prices can rally in the short or medium term.

5. Difference between Backdoor Listing and SPAC

While backdoor listing and SPAC (Special Purpose Acquisition Company) are both ways for a company to become a public company, there are important differences between them:

Backdoor Listing

Private companies take over existing public companies.
Does not require the creation of a new entity specifically for the purpose of the merger.
The process is usually simpler than an IPO, but still requires regulatory approval.

SPAC

SPACs are created as shell companies that list on exchanges with the aim of finding acquisition targets.
Once the SPAC acquires the target, the target company will become public through the SPAC structure.
SPACs are “investment vehicles” that exist first before acquiring target companies.

In general, a backdoor listing is a direct step from a private company to public status through an already listed company, while a SPAC is an entity created in advance for that purpose.

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*Disclaimer

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