Indonesian app giant GoTo, which is set to be created through the proposed merger of unicorns Gojek and Tokopedia, could attract a valuation of around $30-40 billion, sources privy to the development told DealStreetAsia.
While Gojek is expected to hold a majority stake of around 58-60% in the new entity, the remaining will be held by e-commerce giant Tokopedia, they added.
The finer nuances of the transaction are currently being worked out and the merger between the two behemoths is expected to be completed as early as this month.
According to a Bloomberg report earlier today, Gojek’s co-chief executive officer Andre Soelistyo is set to head the entity, which will house three business units under one umbrella – ride-hailing provider Gojek; e-commerce arm Tokopedia; and payment and financial services under GoPay (Dompet Karya Anak Bangsa).
This in effect means that Gojek and Tokopedia will retain their businesses as they are, even as they will be able to collaborate and work together, said sources on condition of anonymity.
“For instance, Tokopedia will collaborate with GoPlay, Gojek’s subsidiary business for content, for supporting live streaming in Tokopedia’s platform,” said one source.
Gojek is currently valued at $10.5 billion, while Tokopedia is valued at $7.5 billion. Before the deal works out between the two behemoths, the existing issue on OVO’s ownership needs to be sorted out, said sources.
OVO is understood to be an important play for both Tokopedia and Gojek’s rival Grab. Both firms failed to obtain a payments licence in Indonesia, which prompted them to acquire a stake in OVO in 2018. As of December last year, Tokopedia-affiliated companies own 41.1% stake in OVO’s parent company, PT Bumi Cakrawala Perkasa. Grab, meanwhile, holds 39.2% through its subsidiary GP Network Asia.
According to Bank Indonesia’s new rules for payment systems which are set to take off from July 2021, non-bank payment services must have at least 15% Indonesian ownership, and at least 51% of shares with voting rights or control with Indonesians – individuals or entities. The existing rules only specify that foreign owners can hold a maximum of 49% stake, with no stipulations on voting rights.
Two sources told DealStreetAsia that the shareholders are trying to resolve the issue of whether Tokopedia can sell its stakes in OVO to Singapore-headquartered Grab in order to meet the regulation.
Going forward, if the merger goes through, the companies are likely to look at options for a possible IPO of the new entity, even as the home market of Indonesia will be the first target for any listing proposition. “Considering Indonesia as the first market for IPO will help shareholders avoid the capital gain tax when they want to exit (sell the stakes). In case of an IPO outside the country, a tax will be levied,” said a source.
The companies, however, haven’t decided on the SPAC route yet, although it’s a burgeoning trend in Southeast Asia for startups to list in the US. Further, they have not decided on the dual-listing proposition either.
“SPAC is still one option, besides a dual-listing option. However, we see that Indonesia will be the first target for IPO,” the person said, adding that a SPAC could complicate the new structure of GoTo and its shareholders.
Both Gojek and Tokopedia are poster boys of success for Indonesian youth. Their common investors are search engine giant Google, Singapore’s Temasek Holdings, and Sequoia Capital India.