Exclusive: Go-Jek said to have acquired majority stake in payments firm Kartuku

Go-Jek
Photo: Go-Jek website

Indonesian consumer and ride-hailing giant Go-Jek is learnt to have acquired a majority stake in payment service provider Kartuku, three sources aware of the development told DEALSTREETASIA.

Go-Jek and Kartuku are understood to have closed the deal two months ago with the deal size estimated to be upwards of $50 million. The deal was a mix of cash and equity, one of the three sources quoted above added.

Both Go-Jek and Kartuku declined to comment in response to email queries sent by this portal. “We don’t have a comment regarding your questions at the moment,” a Go-Jek spokesperson said when contacted.

Sources within Kartuku admitted to a partnership between the company and Go-Jek, although they did not confirm an investment from the ride-hailing company.

Founded in 2001, Kartuku is a premier third-party processor (TPP) and payment service provider (PSP), offering end-to-end payment solutions in 156 locations across Indonesia. It offers hardware products such as payment terminals, network access equipment, card printers and encoders, and software solutions like transaction processing switch, internet payment gateway, smart card applications, and terminal line encryption. Additionally, it provides terminal estate management, support, and maintenance; software management; network and connectivity management; and transaction processing services.

What makes Kartuku most interesting to Go-Jek is its unified payment solution that can process multiple payment methods across banks and merchants. Also lucrative is the former’s customer base that includes 70 of Indonesia’s top 100 retailers.

Interestingly, the biggest connection between the two firms is Nadiem Makarim. Makarim, who founded Go-Jek and initially worked on it behind the scenes, set up Kartuku before he joined the ride-hailing startup full time in 2014.

Another common link is The Northstar Group, the Singapore-headquartered Southeast Asia private equity fund. The investment firm was one of the early Go-Jek backers, having invested in it through its venture capital arm NSI Ventures in 2014 and through the PE fund in 2015.

Andre Soelistyo, Go-Jek’s current president director, was previously at Northstar and had also led the PE firm’s investment in Kartuku.

With digital payments emerging as the new battlefield in Southeast Asia, Go-Jek — whose valuation now stands at $3 billion after it reportedly received $1.2 billion financing from Tencent Holdings  has made similar overtures to other payment firms to augment its technology expertise and gain an upper hand in the region. This portal reported earlier that it is in talks to make a strategic investment in Midtrans, a payments gateway startup formerly known as Veritrans. Midtrans counts Matahari Mall, TokopediaBukalapak, Cottonink, Bro.do, Garuda Indonesia, Pegipegi and JD.id among its customers.

Go-Jek was also said to be participating in a bid to buy digital payments firm, Fusion Payments, for $20 million. The deal failed to materialise as Go-Jek and three other bidders – Grab, Traveloka and Emtek – pulled out.

In September, Go-Jek president Soelistyo told CNBC that the company was trying to emulate the success of China’s Alipay and WeChat Pay in Indonesia. Interestingly, WeChat-owner Tencent is now a Go-Jek investor and should have more than a few pointers to offer on how to grow a cashless payments business.

This portal had recently reported that Go-Jek, which competes with Grab and Uber Technologies Inc, plans to expand its offering to more markets in Southeast Asia, targeting countries with large populations using cash for transactions. This indicates that the company will be targeting the payments space as well as the ride-sharing segment as it looks to expand in the region.

Southeast Asia, which has a significantly large unbanked population, has no dominant player in the financial services space, resulting in several players trying to replicate the success of WeChat Pay or Alipay here. In fact, Indonesia’s mobile payment revolution has not been driven by the banking industry, but the likes of Go-Jek, which began operations as motorcycle-taxi booking app.

Of late, both Go-Jek and Grab have been positioning themselves as payment companies as they look to lock in customers with discounted fares, and then get the users to use their respective mobile wallets for a slew of other services, even as they open up their platforms for third-party merchants.

In the last one year, Go-Jek has made five acquisitions including Indonesian event management and ticketing firm LOKET in August 2017. It acquired Pune-based Leftshift, a mobile app developer, to strengthen its technology hold in November 2016.

In October last year, it acquired MVCommerce, an Indonesian e-payment startup. Last year, it also acquired Pianta, a Bangalore-based mobile platform, and C42 Engineering, a boutique software engineering firm.

Last year, it also joined a Series A investment round in Halodoc, a healthcare network platform, in Indonesia. It has now integrated its own on-demand medicine delivery service, Go-Med, with Halodoc.

Rival Grab is also amplifying efforts to ramp up its digital payments services. Early this year, it acquired Indonesia’s Kudo, a startup that allows those without a credit card or bank account to make purchases online.

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