Gojek and Tokopedia, Indonesia’s two most valuable tech companies, on Monday announced they are merging their businesses in what is the country’s largest-ever business deal. GoTo Group, the combined entity, will offer everything from e-commerce to on-demand services, such as ride-hailing and food delivery, and financial services.
The transaction, which follows months of negotiations and comes ahead of a planned dual listing, is the largest between two Asia-based internet media and services companies to date, according to a joint statement.
Based on independent valuations of Gojek (valued at $10.5 billion) and Tokopedia ($7.5 billion) before the merger, GoTo is worth at least $18 billion.
The companies did not disclose GoTo’s shareholding structure but Gojek is understood to own 58% of the combined entity.
What GoTo looks like
GoTo will be the holding company under PT Aplikasi Karya Anak Bangsa, the legal entity under which Gojek is registered. It will house three independent subsidiaries – Gojek, Tokopedia and financial services and payments unit GoTo Financial.
GoTo Financial holds a 22% stake in digital lender Bank Jago and comprises GoPay and the group’s merchant and financial services offerings.
Gojek co-CEO Andre Soelistyo will lead the combined business as GoTo Group CEO, with Tokopedia president Patrick Cao serving as GoTo Group President.
Kevin Aluwi will continue as CEO of Gojek and William Tanuwijaya will remain the CEO of Tokopedia, the companies have announced. Soelistyo will lead GoTo Financial.
“Today is a truly historic day as we mark the beginning of GoTo and the next phase of growth for Gojek, Tokopedia, and GoTo Financial. Gojek drivers will deliver even more Tokopedia packages, merchant partners of all sizes will benefit from strengthened business solutions and we will use our combined scale to increase financial inclusion in an emerging region with untapped growth potential,” said Soelistyo in a statement.
“We have Gojek’s high volume, high-frequency mobility transactions, combined with Tokopedia’s high-value, medium frequency e-commerce transactions. GoTo Group will account for more than 2% of GDP in Indonesia and we’re going to create a lot more employment and income-earning opportunities as our company and the economy expand,” said Cao.
GoTo registered group gross transaction value (GTV) of over $22 billion and over 1.8 billion transactions in 2020. The combined entity had over two million total registered drivers and more than 11 million merchant partners on its platform as of December 2020.
GoTo will continue to focus on markets where Gojek already operates, including Vietnam, Singapore, and Thailand.
IPO on the anvil
GoTo will pursue an IPO by the end of this year and seek a dual listing in the US and Indonesia, Cao said during a media briefing on Monday. He refused to comment on the timeline and sequence of the two listings.
“We think it’s the right time, given our size, scale and the maturity of our teams, infrastructure, systems and processes, to be a listed company… The combination of GoTo allows us to do that in an accelerated manner,” he said.
Tapping public market capital will help GoTo build up its war chest to take on publicly listed rival Sea Group as well as Grab, which has announced plans to go public in the US via a merger with blank-cheque company Altimeter Growth at a valuation of nearly $40 billion.
GoTo could similarly seek a public market valuation of $35-40 billion, according to sources.
But first, more private capital
GoTo is also seeking to close a pre-IPO funding round, Cao said in response to media queries.
Ahead of the merger announcement, Gojek had secured an additional investment of $300 million from Indonesian telecom firm Telkomsel last week. Tokopedia had last raised an unspecified amount in funding from Google and Temasek in November 2020.
Since the launch of its app in 2015, Gojek has raised over $5 billion in funding from top investors including Google, Facebook, PayPal, Tencent, and Visa. Meanwhile, e-commerce giant Tokopedia has garnered around $2.8 billion from Alibaba Group, SoftBank, Google, Sequoia Capital India, and many more.
Tokopedia could divest OVO stake
Tokopedia is considering divesting its minority stake in payments major OVO, which is partly owned by Grab, GoTo president Cao said on Monday.
DealStreetAsia had last month reported Tokopedia’s plans to divest its stake in OVO.
Tokopedia owns a 36.1% stake in OVO parent Bumi Cakrawala Perkasa through its wholly-owned subsidiary Digital Investindo Jaya. Its co-founders Leontinus Alpha Edison and William Tanuwijaya own another 5% stake in Bumi through PT Wahana Innovasi Lestari that was acquired from Grab in February 2020.
Bank Indonesia’s rules bar an entity from holding a controlling stake in more than one digital wallet in the country. The central bank norms thus prevent GoTo from becoming an owner in both OVO and Gojek’s payments platform GoPay.