Indonesia’s offline-to-offline e-commerce service Kioson – Grab’s Kudo’s direct competitor – announced its IPO plan in a bold statement move after refusing to give up majority shares to private equity and venture capital firms.
Kioson will be the first Indonesian startup to go public, and will be the first from its industry to list on IDX.
Kioson plans to raise Rp 42 billion ($3.4 million) from offering up to 150 million shares – equivalent to 23.07 per cent of the enlarged paid capital – at Rp 280 ($0.02) apiece. About 75 per cent of the proceeds will be used to acquire Narindo Solusi Komunikasi, an affiliated tech company and an aggregator of mobile data e-vouchers. Narindo partners with mobile phone operators and e-commerce firms like Lazada, Tokopedia, and Blibli.
Meanwhile, the rest of the fresh money will be allocated for working capital, including inventory procurement and operational expenses.
The book-building period will last between September 7 and September 11. Kioson’s shares are slated to be listed on the IDX on October 3, 2017. The corporate action is facilitated by Sinarmas Sekuritas as sole underwriter with full commitment.
“We went for a roadshow and found that too many PE and VC investors were demanding majority of our shares, and we decided that we weren’t ready for that. We have the belief that a company that has strategic channels to rural retail is very strategic and therefore must be owned by locals,” Jasin Halim, co-founder of Kioson, said on the sidelines of press conference in Jakarta.
“This will hopefully inspire other startups and set an example that (they) don’t have to rely only on VCs for funding, but can also consider IPO. There is a way of consolidating (firms) to achieve profit,” he added.
Founded in 2015, Kioson is often compared to O2O solution provider Kudo, which was bought by Grab for $100 million. It provides an online digital platform to the small and medium size retailers through partnership system, allowing retailers in the rural areas to conduct digital transactions with big companies in urban areas.
Currently, Kioson facilitates about 500,000 monthly transactions. It sells products from Tokopedia, Elevania, and Berrybenka, among other stores. The startup also collaborates with ride-hailing app Uber, and a number of banks such as Bank Sinarmas and BNI.
The company now claims to have more than 19,000 partners across 384 Indonesian cities, and expects to see the number grow to 30,000 by the end of the year. In addition to distribution channels, the company will also expand its products. Kioson is now in the process to include hotel and flight ticketing services.
Despite rapid growth in revenue, Kioson still suffers losses in profit – reporting $330,000 in losses as on April 2017. With the acquisition of Narindo, Kioson aims to break even in 2018.
“Unlike other startups, our focus is to build a profitable business. Too many of them are now burning cash to chase dramatic numbers that are often demanded by investors. That’s not our way. We believe we can be profitable next year,” he stated.
Kioson raised $450,000 from publicly-listed firm Mitra Komunikasi Nusantara in exchange for a 4.94 per cent control back in June.
Sinarmas Sekuritas senior equity analyst Wilbert said, in his report: “What’s interesting about Kioson business model is that it focuses on the rural areas. Today, most big e-commerce only serve online purchases with online payment (by debit or credit card). However, we see the literacy on technology is still limited in Indonesia, particularly in the rural areas. In addition, Indonesia remains a cash society, with only 36 per cent adult in Indonesia owns bank account in 2014 (Findex World Bank). While the credit card penetration is even smaller with Bank Indonesia records 17.5 million units as of second semester of 2017. Therefore, Kioson appears to resolve the gap between rural area and e-commerce.”
Among 262 million of Indonesia population, only around 51 per cent or 132 million have access to internet, with only 9 per cent of digital e-commerce penetration. Lack of infrastructure and technology literacy among people in the rural areas are two of the main reasons behind the low penetration.
As a result, the industry is still very promising, Wilbert said, as Kioson plays the role of helping people who have access to technology to purchase goods and services from digital stores.