Tokopedia tower located in Kuningan Central Business District. Shutterstock.
Ride-hailing and payments giant Gojek agreed to combine with e-commerce pioneer PT Tokopedia to create the largest internet company in Indonesia, before seeking a stock-market debut at home and in the US.
The combined entity is set to form a powerhouse in the world’s fourth most-populous nation, encompassing businesses from car-sharing and fintech to online shopping and delivery. The startups said Monday they will form a holding company called GoTo through a deal backed by shareholders including Google and Alibaba Group Holding Ltd., without providing a valuation.
Gojek and Tokopedia are betting a larger size will help them better compete against rivals such as Sea Ltd. and Grab Holdings Inc. as so-called super apps gain popularity in Southeast Asia, a region of more than 650 million people. The two companies together were valued at about $18 billion during their merger talks, with Gojek shareholders set to receive 58 percent of the new entity’s ownership and Tokopedia holders the rest, people familiar with the matter have said.
“It’s a union of equals,” Gojek co-Chief Executive Officer Andre Soelistyo, who will head the combined app giant, said during a media conference via Zoom. “We are creating probably the first platform in the world that combines very distinctive platforms — e-commerce, on-demand and financial services — into one larger ecosystem.”
GoTo will pursue a listing by the end of 2021, with a goal of having its shares traded in both Jakarta and the U.S., Tokopedia president Patrick Cao told reporters. The company is considering all options, including an initial public offering and a deal with a special purpose acquisition company, he said. The target valuation in the public markets is between $35 billion and $40 billion, Bloomberg News has reported.
A listing would give global investors another opportunity to bet on one of the world’s fastest-growing internet economies. Shares of Sea, the only major Southeast Asian internet company traded in the US, have more than tripled over the past year, boosted by the growing popularity of its online shopping platform Shopee and mobile gaming service.
Gojek and Tokopedia have been in discussions for a possible merger since late December after Gojek’s negotiations with rival Grab collapsed. Grab last month agreed to go public in the US through a combination with Altimeter Growth Corp., the largest-ever merger with a blank-check company.
“This will strike a blow at Grab’s lofty aspirations, given GoTo suddenly becomes a larger, more diverse entity,” said Angus Mackintosh, founder of CrossASEAN Research. “Shopee remains a significant competitor in Indonesia in an increasing number of areas, but it now has a bigger competitor in this combined entity.”
Tokopedia and Gojek estimate the combined market for on-demand transport and delivery services, e-commerce and fintech in Southeast Asia at $134 billion in 2020.
Tokopedia’s Cao will retain the president’s title at the new entity, working side by side with group CEO Soelistyo, 37. William Tanuwijaya, CEO of Tokopedia, will continue to lead the online shopping pioneer he founded in 2009, while Gojek co-CEO Kevin Aluwi will continue to helm ride-hailing and delivery giant Gojek. Soelistyo will also head the payments and financial services unit GoTo Financial.
Gojek was started as a call centre in 2010 by Nadiem Makarim to arrange courier deliveries in Jakarta. Everything was manual: employees called motorbike drivers one by one until someone accepted an order. Makarim worked at other startups so he could keep the fledgling operation alive.
Soelistyo was working at private-equity firm Northstar Group, which became the first institutional investor in the upstart in its early days.
With backing from Northstar, Makarim decided in 2014 to develop a mobile app. When that debuted in early 2015, the service was so popular Gojek couldn’t cope with demand. Soelistyo joined Gojek as president that year and has helped to expand it to about 20 consumer services.
He was named co-CEO together with Aluwi in October 2019 when Makarim accepted a minister’s post in Indonesia’s government and resigned from Gojek.
“We were small local companies that were going up against global giants,” Aluwi said. “We are no longer underdogs. We have an opportunity to become a global, enduring, iconic company, born in Indonesia.”
Goldman Sachs Group Inc. is advising Gojek, while Citigroup Inc. is assisting Tokopedia.
By Yoolim Lee