There have been many speculations on the ownership of Indonesia’s fifth unicorn startup OVO ever since Lippo Group’s patriarch, Mochtar Riady, announced the divestment of a controlling stake in the fintech firm a year ago.
According to the latest corporate filings in Indonesia and Singapore unearthed by DealStreetAsia, Grab Inc’s holding in OVO’s parent Bumi Cakrawala Perkasa has dropped from 44.2 per cent to 39.2 per cent post a restructuring exercise in February this year to pave the entry of new shareholders – Wahana Innovasi Lestari and Ide Teknologi Indonesia – that control 5 per cent each in Bumi.
The Singapore-based ride-hailing giant’s investment in Bumi is routed through its subsidiary, GP Network Asia (GPNA).
Wahana is owned by the co-founders of Indonesia’s e-commerce giant Tokopedia, Leontinus Alpha Edison and William Tanjuwijaya. Tokopedia separately holds 36.1 per cent stake in Bumi through its wholly-owned subsidiary, Digital Investindo Jaya. With the current investment from Wahana clocked in February, Tokopedia-affiliated companies now control 41.1 per cent shares in OVO’s parent.
The ownership of Ide Teknologi is squarely divided among the co-founders of Indonesia’s fintech firm Kudo, Albert Lucius and Ignatius Agung Nugroho, each with 50 per cent stake in the company. Grab fully acquired Kudo back in 2017. Lucius currently serves as Chief Production Officer at OVO, while Nugroho is a senior director at Grab.
Lippo’s stake in OVO is represented by Prima Ecommerce Global and Inti Anugrah Pratama, which together control 7.2 per cent, while Japan’s financial services firm Tokyo Century Corp., which is also an investor in Grab, managed to maintain its ownership at 7.5 per cent.
Following the share ownership restructuring in February, Grab has paid $199 million, in six tranches, as advanced subscriptions for new shares to be issued by Bumi. It remains unclear how the capital injections will change Grab’s interest in OVO as other shareholders could also top up their investments.
As of the writing of this article, the notarial deed for the additional capital was still in process. When contacted, Grab and Tokopedia declined to comment on their shareholding pattern in OVO.
History of share ownership in OVO’s parent, PT Bumi Cakrawala Perkasa
Source: Indonesia’s Directorate General of General Law Administration & DealStreetAsia Research
The latest change in ownership structure highlights Grab’s shrinking control in OVO since it first invested in the fintech company in January 2018. At that time, Grab, which had struggled to obtain a license from Indonesia’s central bank for its e-payment arm GrabPay, had made a strategic investment in OVO by acquiring a 50 per cent stake in Bumi.
The ride-hailing giant, however, was not the first investor in OVO. Tokyo Century acquired 10.3 per cent ownership in Bumi in May 2017 and followed it by another round of capital injection in December that year, raising its stake to 20 per cent.
Eleven months after Grab’s move, Tokopedia made its first investment in OVO in December 2018 by acquiring 32.5 per cent stake in Bumi, hence diluting Grab’s stake to 35 per cent at the time. Since then, there have been four share restructuring exercises in Bumi, the latest being in February.
The investments in OVO by Tokopedia and Grab – both backed by Japan’s SoftBank Group – has led to strategic partnership between the three tech giants, creating Indonesia’s largest tech ecosystem that covers multiple business verticals with OVO being in the middle as the preferred payment gateway, posing a credible threat to GoPay, the e-payment arm of Grab’s arch-rival, Gojek.
Joel Shen, a tech investment lawyer at international tech firm Withers said a dilution in Grab’s shareholding in OVO is not indicative of its sentiment on the Indonesian tech space. “Even at 39 per cent, Grab would still be a very substantial shareholder in one of the largest fintech players in Indonesia,” Shen said, adding that such a level of ownership is considered as a controlling shareholder by Indonesian regulations.
“The Indonesian digital economy is growing exponentially, and COVID-19 has accelerated the adoption of technologies such as digital payments. Grab is one of the most established players in the Indonesian market and is well-positioned to capitalise on this growth,” said Shen.
The proposed merger
OVO’s slice of Indonesia’s e-payment pie is expected to receive a boost from the proposed merger with DANA, which is backed by Ant Financial and Elang Mahkota Teknolog (Emtek). Emtek is the largest shareholder in Tokopedia’s e-commerce rival Bukalapak.
A source who has a stake in the merger told DealStreetAsia earlier this month that negotiations, which started last year, have prolonged as shareholders jostled on “who will get what”. Nonetheless, the merger is poised to conclude “soon”, said the source, with OVO controlling roughly 60 per cent stake in the new entity, in which Grab’s indirect ownership is expected to be less than 30 per cent.
Meanwhile, talks are also currently underway between Gojek and Grab for a potential merger between the two ride-hailing giants, raising questions whether this development may delay the OVO-DANA merger.
“I do not think any ‘pre-condition’ is absolute in this case, at least not for all the stakeholders in the negotiation,” said Jianggan Li, founder and CEO of venture builder and investment consultant Momentum Works.
He argues that with reduced money burn in the second half of 2019 and under the COVID-19 pandemic period, it is natural for deals to take longer time to materialise.
“None of the companies are in dire state as far as cash is concerned, especially under COVID,” Li added.