Indonesia’s on-demand motorbike taxi service Go-Jek has raised $550 million in a new funding found that was led by private equity firms KKR & Co. and Warburg Pincus LLC, as it battles competition from other ride-hailing apps such as Grab and Uber in a 250 million people market.
The other named investors in this round include Farallon Capital and Capital Group Private Markets. The company said both existing shareholders and other international investors, had also participated in this round, which is estimated to value the Indonesian ride-hailing service at over $1.3 billion. Its existing investors include Sequoia India, Northstar Group, DST Global, NSI Ventures, Rakuten Ventures and Formation Group.
The development comes within days of China’s Didi Chuxing reaching a deal to acquire Uber’s operations in that country, making the combined entity a $35 billion firm. Post that deal, which had ended the yearlong war between the world’s two largest ride-sharing companies, Bloomberg, in a report, said Uber Technologies Inc. was now looking to redeploy 150 engineers from its China operations to other regions such as Southeast Asia. Bloomberg, in another report, citing sources, had said that China’s Didi Chuxing and SoftBank Group Corp. were set to lead of new $600 million plus round of funding for top Southeast Asian ride-sharing service Grab, adding that the deal would be announced within days.
A recent report, jointly released by Temasek Holdings Pte and Google Inc, had predicted that Southeast Asia’s ride-hailing market would grow more than 500% $13.1 billion by 2025.
Go-Jek said the new funding round will enable it to enhance the scale and quality of its platform and application services. The company also indicated that it planned to expand operations outside Indonesia, to Southeast Asia region, and this is set to trigger a three-way battle with Uber and Grab, across the region. Currently, its services include motorcycle ride-hailing, online food delivery, instant courier deliveries and lifestyle services, as well as services in the fast growing e-wallet and car ride-hailing segments. Each of these services addresses the daily needs of Indonesian urbanites.
“G-Jek will additionally leverage the new investors’ investment experience in the telecommunications, media and technology (“TMT”) space as well as their global network of partners to deepen its offerings in Indonesia and potentially across the region,” the company said in a statement.
For the last two weeks, the market buzz in Jakarta on Go-Jek’s latest funding round had intensified, evan as the company, named after the motorcycle taxis, or ojeks, continued to remain silent on the issue.
This is by far the biggest startup to date in Indonesia, and also the largest fund raising round in Southeast Asia. KKR’s investment in Go-Jek is learnt to have come from its $6 billion pan-Asian fund, which it closed in 2013.
Harvard grad Nadiem Makarim, Co-Founder and CEO of GO-JEK, said that with the support of investors, the firm would ‘build on its initial success to become the largest on-demand application of choice for all Indonesians, and improve the daily lives of more than 200,000 motorcycle and car driver partners, more than 35,000 GO-FOOD merchants – whose businesses the company had helped grow – and more than 3,000 service providers on its other on-demand services.”
Terence Lee, Director at KKR Asia, said in a statement: “GO-JEK is unique in its ability to be the number-one service provider across almost all key categories and the company has a real opportunity to strengthen its position as a leading mobile platform in Indonesia. The foundation of GO-JEK’s success is its focus on providing innovative, convenient and cost-effective online solutions that improve its customers’ everyday lives. This ingenuity is the result of the innovation, vision and execution of Nadiem and his high caliber team and we look forward to continuing to attract world-class talent to one of the world’s most dynamic tech companies.”
Jeffrey Perlman, Head of Southeast Asia for Warburg Pincus, added, “We are excited to partner with Nadiem, Kevin, Andre and the entire GO-JEK management team. With a rapidly expanding middle class, increasing urban density and a young demographic that is internet savvy, GO-JEK is well positioned to become the ‘go to’ platform for high frequency daily services including transport, food, logistics and payment. We look forward to leveraging our global network of partners and experience in the technology and consumer sectors to help the company build the leading internet platform in Indonesia and across the region.”
KKR has been investing in and also providing financial solutions to companies in Indonesia since 2013. In recent years its appetite for the country appears to be increasing. Just last month, the private equity major had announced that it would invest Rp 1 trillion ($81 million) into PT Japfa Comfeed Indonesia Tbk (JPFA), a local subsidiary of Singapore’s agri-food producer Japfa Ltd. The transaction will see KKR purchasing 10.44 per cent stake in Japfa Indonesia through private placement.
Other activities for the PE firm in Indonesia include investments from KKR-backed Mandala Energy – a Southeast Asia-focused oil and gas exploration and production company – and an investment in Tiga Pilar Sejahtera Food, one of Indonesia’s leading food businesses.
Go-Jek has been facing stiffer competition from Singapore-based transportation service app Grab, which has raised $700 million till date, and is making a major push into Indonesia. Grab is targeting to grow its market share in Indonesia to 50 per cent this year. The Singapore-based ride hailing app has been intensively expanding its services and networks in Indonesia, via partnerships with local companies in order to formulate and develop products and services.
Go-Jek said its mobile applications had been downloaded more than 20 million times as of June 30, 2016. In June 2016 only, there were over 20 million bookings on the GO-JEK platform, translating to roughly eight bookings per second being processed in that month.