E-commerce platform Bukalapak, which became the first Indonesian unicorn to list on the local stock exchange, on Friday made a stellar debut with its shares opening 24.11% higher than the IPO price of 850 rupiah apiece.
Shares in the e-commerce platform started trading on the Indonesia Stock Exchange (IDX) at 1,055 rupiah per share, which gave it a market capitalisation of $7.6 billion. Its shares closed at 1,060 rupiah after touching the bourse’s 25% limit minutes after opening.
Bukalapak’s market debut underscored the keen investor interest in the company’s growth story, despite valuations appearing overpriced to analysts. The $1.52 billion it raised in its IPO is five times more than the original target of just $300 million. With significant investor interest, the bookings that happened through pooling allotment for Bukalapak touched 4.8 trillion rupiah.
The company increased the pooling allocation portion for retail investors from 2.5% to 5% of the total available order. Therefore, the value of the shares in the pooling allocation portion for retail investors rose from the previous 547.5 billion rupiah to around 1.1 trillion rupiah.
“Bukalapak has succeeded in gaining interest from local investors and international, including sovereign wealth fund from other countries. The shares offering has gained an excess demand of around 8.7 times, with the book building of more than 100,000 investors,” Silva Halim, acting CEO of Mandiri Sekuritas said.
Bernstein’s Singapore managing director Venugopal Garre said that this is the opportune time for many startups to go public.
Many of these startups grew quickly during the pandemic as consumers started to go online, and their behaviour is likely to stick given how prolonged the virus has been. “A lot of things we do have become habits,” he said.
In Garre’s view, COVID-19 had turned these platforms into household names. At the same time, there is an immense amount of liquidity in the market hunting for returns. But Garre cautioned that while many tech startups may be rushing to go public, there could be some “mishaps” along the way as some – particularly those that serve a single or few markets – may not be able to scale up. “[The] moment of truth will happen in a few years.”
As one of Indonesia’s tech darlings, Bukalapak’s cap table had as many as 47 investors. Its top three backers were Emtek subsidiary PT Kreatif Media Karya, Ant Group’s API Investment Limited, and Singapore wealth fund GIC Pte. After the IPO, these investors would still own 46% of Bukalapak collectively.
Microsoft and Mirae Asset also hold a small stake in the company – together, their stake in Bukalapak accounted for 2.7% after the listing.
Post-IPO, Bukalapak’s three co-founders own a 9.04% stake in the company.
Mandiri Sekuritas, Buana Capital Sekuritas, UBS Sekuritas Indonesia, Bank of America and Mirae Asset Sekuritas Indonesia were the underwriters for the IPO.
Bukalapak looks to be on track towards profitability. It recorded a net loss of 1.349 trillion rupiah ($92.66 million) in 2020, less than half of 2019’s 2.8 trillion rupiah ($191.99 million) losses, according to its prospectus.
The narrowing net loss signals higher marketing and sales efficiency.
Net sales in 2020 stood at 1.35 trillion rupiah, a nearly 26% increase from the previous year and a nearly fourfold increase from 2018’s 291.9 billion rupiah. Its marketplace segment made up 75% of its revenue, or 1.03 trillion rupiah in 2020.
Founded in 2010, Bukalapak is an online marketplace that enabled small and medium-sized enterprises to sell anything from clothes to food. According to a report by Momentum Works, it was Indonesia’s fourth-largest e-commerce platform in 2020, accounting for 7% of the country’s e-commerce market. It competes against larger rivals Tokopedia, Lazada and Shopee in Indonesia’s $40 billion market.
But being the country’s first tech unicorn to list could give it an edge. GoTo, the entity formed after the merger of Tokopedia and ride-hailing and deliveries giant Gojek earlier this year, is also eyeing a listing by the end of this year in Indonesia before it lists in the US. Singapore-based Grab is also set to list on the NASDAQ by the fourth quarter of this year.
Bukalapak’s listing is a win for the IDX, which has been trying to attract its local tech giants to list locally instead of heading offshore to deeper markets such as the US. The bourse is said to be considering allowing dual-class shares and special purpose acquisition vehicle listings.
Editor’s note: This story was updated with Bukalapak’s closing price and analyst comments.