China’s Tencent in talks to invest in Indonesian unicorn Go-Jek

Visual from the company website

Chinese internet giant company Tencent Holdings is reportedly in talks with Indonesian unicorn app Go-Jek about a possible investment, according to The Information. There are no details yet on the potential size of the investment.

Go-Jek is one of Indonesia’s largest startups by valuation and is the market leader in the country. The Sequoia Capital-backed startup was valued at around $1.3 billion last year when it raised $550 million from KKR and Warburg Pincus.

Go-Jek has yet to give comments on the report.

Meanwhile, Tencent Holdings stock jumped 2.61 per cent by the end of Thursday’s trading on the back of the news, giving a boost to Hong Kong tech stocks which rose 1.8 per cent at the close.

Tencent Holdings is a Chinese investment holding company whose subsidiaries provide media, entertainment, internet and mobile phone value-added services and operate online advertising services in China. It is also an investor of Didi Chuxing, which owns a minority stake at Go-Jek’s competitor Grab.

In January 2017, Tencent Holdings Ltd. and Warburg Pincus led a $215 million round of funding for year-old Beijing startup Mobike, ratcheting up the competition in China’s burgeoning urban bicycle-sharing scene. The round brought in a clutch of new, influential names including private equity firm TPG Capital, Chinese travel service Ctrip.com International Ltd., and Huazhu Hotels Group. Existing backers Hillhouse Capital, Sequoia Capital also took part in the financing.

Mobike is among the largest of a growing crop of private bike-sharing operators, known for its distinctive orange-hued and GPS-equipped bikes. The industry is drawing hundreds of millions of dollars from investors betting that bicycles offer a more traditional alternative to the car-hailing that prevails in urban centers.

Heating competition

In Indonesia, Go-Jek faces fierce competition from American Uber and Singapore-based Grab, who earlier this month said it would invest $700 million in the country over the next four years. The investment would see Grab deploy a range of programmes that aim to “provide all Indonesians an opportunity to move into the digital economy”, including opening a Grab R&D centre in Jakarta, launching a social impact fund to invest in companies focused on deepening financial inclusion, and increasing access to mobile payments and financing opportunities.

There even have been circulating reports saying that Grab is eyeing Indonesian e-commerce platform, Kudo, for $100 million. 

Ernst & Young noted in its quarterly PE briefing report for Southeast Asia that published last month: “While Go-Jek is entirely focused on Indonesia at present, Grab has stated that its key goal is to further penetrate the Indonesian market. This could see the two companies go head- to-head in a more aggressive manner going forward.”

The market in Indonesia for ride- hailing applications is estimated at $15 billion by Grab, providing significant opportunity.

A recent report, jointly released by Temasek Holdings and Google, had predicted that Southeast Asia’s ride-hailing market would grow more than 500%  $13.1 billion by 2025.

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Grab launches $100m Indonesian social impact fund

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