Jakarta and Ernest Fung

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Indonesia’s leading e-commerce and on-demand platform will use the funds raised to continue its growth plans. Shanny Basar reports.

Indonesia’s Gojek (an on-demand services and payments platform) and Tokopedia (an e-commerce specialist) have long been big domestic names. But, following their merger in May last year, the combined PT GoTo Gojek Tokopedia (GoTo Group) now represents country’s largest tech company.

Describing itself as the “go to” ecosystem for daily life in Indonesia, the world’s fourth-most populous country, it covers online shopping, ride-hailing, food delivery and fintech. The combined business encompasses close to two-thirds of all household consumption according to the firm. 

On April 11, 2022, less than a year after the merger, the combined company went public, raising $1.1bn in an initial public offering on the main board of the Indonesia Stock Exchange (IDX), representing a market capitalisation of $28bn.

It was Asia’s third-largest initial public offering (IPO) and the fifth-largest in the world this year, as well as the first listing with multiple voting rights after approval by OJK, the Indonesian financial regulator.

Local boost

Ernest Fung, head of corporate development at GoTo Group, hopes the IPO will inspire the next generation of tech entrepreneurs to list locally and enable the Indonesian population to invest in homegrown companies.

“When we started the business, tech talent was more limited,” he adds. “Our founders created businesses which inspired people to become engineers and entrepreneurs.”

Mr Fung describes the union of Gojek, advised by Goldman Sachs, and Tokopedia, advised by Citi, as a coming together of founders who have been friends and partners for a long time, and had complementary businesses. The companies first worked together in 2015 to accelerate e-commerce deliveries using Gojek’s local network of drivers. He says: “We really believe that one plus one is a lot more than two. The fact that coming together enabled us to get to a point where we could list our business was an added bonus.”

GoTo Group thought long and hard about where to go public and believed a domestic listing was the best starting point, although the prospectus included a potential international listing.

“An Indonesian IPO made a lot of sense because both institutional and retail investors use us every day,” adds Mr Fung. “They understand the ubiquity of our platform and the long-term value that it can create because of the number of lives and businesses that we touch.”

Approximately 300,000 investors participated in the offering led by joint lead underwriters PT Indo Premier Sekuritas, PT Mandiri Sekuritas and PT Trimegah Sekuritas Indonesia, which was the highest number to take part in an IPO on the IDX.

to be able to order almost anything and have it delivered on the same day is something you don’t see anywhere else

The banks were chosen to meet the needs of the company as the IPO was under new regulations, and in order to implement its Gotong Royong Share Programme, which enabled drivers, merchants, customers and employees to participate in the offering.

GoTo Group had many consultations with the regulators, which led to the authorisation of multiple voting rights. Mr Fung says: “The regulators have done a great job and been very progressive in changing the regulations to enable tech companies like ourselves to list.”

He highlights that the IPO was completed during volatile markets with ample demand from both institutional and retail investors, with retail allocations having to be clawed back.

Path to profitability

Although the IPO was purely for domestic funds, there has been increased interest from international investors and more overseas coverage. However, the group’s focus remains local, primarily on Indonesia, although it also has a presence in Singapore and Vietnam. Mr Fung says: “The IPO has enabled us to have the resources to execute on our business plan and we have a very clear path to profitability.”

He also highlights the potential for user cross-pollination, saying: “There is a lot of potential to cross-sell services. Overlapping users create more value, spend more on our platform, more frequently, and are more loyal … To be able to order almost anything and have it delivered on the same day, or within two hours, is something you don’t see anywhere else.”

It also plans to use its new GoTo Financial brand, which brings together its GoPay checkout service with other financial offerings, and paves the way for new services such as lending products.

One differentiator, according to Mr Fung, is that the group has an e-wallet, while competitors operate e-money licences, where users have to top up wallets before spending. He explains: “Our e-wallet licence allows users to directly draw funds from credit cards and bank accounts, which makes the experience more seamless, like Apple Pay or Google Pay.”

The global macroeconomic environment is challenging, but Mr Fung argues that Indonesia has been relatively stable. GoTo Group’s e-commerce business is positioned as an ‘everything’ store, so the company believes it can dynamically shift between consumption patterns should it need to.

“In the event of a potential slowdown in discretionary spending, people will shift towards consumer staples,” adds Mr Fung. “They will continue to spend on our platform, but the categories might be a little different.”


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