Indonesian e-commerce service Tokopedia will go public within the next three years, with a dual listing in the U.S. and its home market of Indonesia, the company’s president told the Nikkei Asian Review on Thursday.
The unicorn — as unlisted companies valued at over $1 billion are called — is backed by Japan’s SoftBank Group, which is run by tycoon Masayoshi Son through its embattled Vision Fund. The fund has seen its portfolio companies struggle to make successful stock market debuts. But Tokopedia, with a firm grip on Indonesia’s e-commerce market, could provide SoftBank’s fund a badly needed IPO success.
Speaking on the sidelines of Nikkei Forum Innovative Asia, Patrick Cao said that Tokopedia will “definitely [list in] Indonesia,” and that the second venue “most likely” will be the U.S. “I think it has the most depth in terms of liquidity, technology expertise, as well as research,” he said. “A few other stock exchanges have talked to us as well, but on the surface of it, I think those two are the best fits.”
Cao said as the company already has a presence in Indonesia, a dual listing in the region’s financial center, Singapore, “might not make much sense. If you want to go for the international investor profile, plus technology expertise and depth in terms of capital, then U.S. [is the best market]. Considering who our peer group is as well — Alibaba, Amazon — those guys are all listed [in] the U.S.,” he said
A dual listing makes sense for successful Indonesia startups, as the country’s stock exchange is much smaller and less liquid than its global peers. Fellow Indonesian unicorns Gojek and Traveloka are both considering dual listings when they eventually float their shares, but they have not made clear their preferences for a listing outside Indonesia.
Tokopedia’s three-year time frame for an IPO is understandable, given current market perceptions of companies in SoftBank’s portfolio. Alongside the well-documented problems such as ride-hailer Uber’s IPO flop, as well as the botched IPO and $9.5 billion bailout of shared office operator WeWork, a number of Vision Fund portfolio companies have laid off staff, or are planning to, as they look to ditch their “growth at all costs” mentality and move toward more sustainable business models.
The problems at WeWork have “not really” affected Tokopedia, Cao said. “A lot of those things that the press has been talking about [regarding profitability], we have been implementing, actually, from early last year.” The Indonesian company previously said that it aims to break even by 2021.
But the “IPO time window has to make sense,” Cao added, “or else you can have an unsuccessful [IPO], or a company that [holds an] IPO successfully, but prices [go] down.”
“I think [Chinese food delivery company] Meituan is a good example [of success]: profitability for a few quarters [after the IPO]. And picking the right market window is very important. We are always looking out for that.”
Tokopedia was the most visited e-commerce website in Indonesia in the third quarter of last year, according to market research specialist iPrice.
This article was first published on Nikkei Asian Review.