Indonesia Gojek and Tokopedia close $ 18 billion merger


Gojek and Tokopedia, Indonesia’s two largest startups, have agreed to a merger that will create an $ 18 billion food delivery, rideshare and e-commerce group with reach across Southeast Asia. Is.

The merged company, which will be renamed GoTo, will begin prepare for a double registration in Indonesia and the United States later this year, according to group executives. It will aim for a public market valuation of up to $ 40 billion, said two people familiar with the company’s plans. The $ 18 billion figure was based on fundraisers in 2019 and 2020.

The deal will create Southeast Asia’s largest private tech start-up and give the group additional firepower against well-funded regional rivals, including Grab “super app” and e-commerce platform Shopee, supported by SoftBank of Japan and Tencent of China, respectively.

SoftBank and Tencent are also expected to benefit from the GoTo merger, as respective investors in Tokopedia and Gojek. Other investors who backed the deal included Alibaba, Facebook, Visa and Google.

News from the union provided further evidence of the maturing of the rapidly growing tech industry in Southeast Asia. Investors have been drawn to the region of 655 million people in part because it has been less affected by US-China tensions. Foreign investment in india, especially from China, has also encountered obstacles.

The merger announcement came weeks after Singapore-headquartered Grab offers delivery, ridesharing and financial services, an register the merger with a blank check vehicle. The deal valued Grab at $ 40 billion, and it will be listed on the Nasdaq this year.

The US-listed shares of Sea Group, the parent company of Shopee and the games subsidiary Garena, surged 395 percent last year.

While Gojek has operations in several Southeast Asian countries, GoTo will have its strongest presence in Indonesia, the region’s largest economy and the fourth most populous country in the world. The merged entity has over 100 million monthly active users on its platforms and a total group gross transaction value of over $ 22 billion in 2020.

“Even though GoTo only focused on Indonesia. . . if it can capture most of the market share in the areas it focuses on, it is a real opportunity, especially in financial services, ”said Zennon Kapron, director of the focused fintech research and advisory group. on Asia, Kapronasia. “Indonesians are among the least banked and most underbanked in the region.”

Gojek co-CEO Andre Soelistyo will lead the combined business with Tokopedia’s Patrick Cao as chairman. Gojek’s other co-CEO, Kevin Aluwi, will remain at the helm of this company and William Tanuwijaya will remain CEO of Tokopedia. Goldman Sachs and Citi acted as advisers.

Both companies’ platforms and apps, which report to the newly formed holding company, will operate independently, but there will be cross-pollination, executives said. Gojek will own more of the holding company in a split of around 58% to 42%, add two people with direct knowledge of the deal.

“We have Gojek’s high-volume, high-frequency mobility transactions, combined with Tokopedia’s high-value, mid-frequency e-commerce transactions,” Cao said. “GoTo will account for over 2 percent of gross domestic product in Indonesia and we will create many more jobs and income as our business and economy grows.”

Sea, Grab and GoTo will likely continue to burn cash to compete across Southeast Asia, with the three companies increasingly focusing on providing financial services to the region’s underbanked population.

Indonesia remains GoTo’s largest market, but the company’s future goes beyond a single economy, said Gojek’s Aluwi, adding that there were plenty of opportunities to create “new products. and new experiences ”.

The union of Gojek and Tokopedia will create a more compelling narrative to sell to public market investors, but their combination does not automatically put them ahead of their existing rivals, analysts said.

“Collectively, they are better off but [the deal] will not address all the problems they have, ”said Roshan Raj, a partner for the Redseer board. “If Shopee remains aggressive, Tokopedia needs to fix this issue at the ecommerce level – it can’t be passed on to the bigger platform.”

Investors have said that GoTo’s strength will be its reach across a range of industries.

“There is no modern internet company, in any part of the world that I know of, that has such deep ownership of so many categories at the same time,” said Shailendra Singh, Managing Director of Sequoia Capital India, who has invested in both companies.

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