PT Tokopedia, the online marketplace backed by the SoftBank Vision Fund and Alibaba Group Holding Ltd., has begun discussions with potential investors for what’s likely to be its final private funding round before a dual stock market listing.
Indonesia’s largest online mall is considering listing shares at home as well as in another as-yet-undecided location, Chief Executive Officer William Tanuwijaya told Bloomberg News. But he wouldn’t specify a timetable for an initial public offering, citing uncertain market conditions in a trade war.
Tokopedia, the country’s most valuable startup after ride-hailing giant Gojek, is focused on its home market for now but an overseas listing should raise its profile while attracting new investors. Tanuwijaya said the startup he co-founded 10 years ago is aiming to break even next year. Its gross merchandise value should triple to as much as 222 trillion rupiah ($16 billion) in 2019, he said. Revenue is growing faster than GMV, while its community of sellers rose to 6.4 million from about 5 million last year, he added.
“Dual-listing is most likely to be our approach” because the Indonesia-focused e-commerce site wants its consumers and sellers to also become shareholders, the 37-year-old founder said in an interview in Jakarta. “We are now in the process of picking the right partners who believe in our vision and mission.”
Tokopedia is gunning for a listing at a time many of its peers around the world are tapping the brakes. Uber Technologies Inc.’s disappointing debut and the chaos surrounding WeWork’s botched IPO have put startups under pressure to prove their business model can lead to revenue and profit growth. The co-founders of Grab, Southeast Asia’s most valuable startup and another of SoftBank’s portfolio companies, have said they’re not planning an IPO any time soon.
With a looming risk of a global recession, it’s crucial for large platforms like Tokopedia to establish a sustainable business by generating profits, said Chatib Basri, a former finance minister and senior lecturer at the University of Indonesia. “When there is a disruption to a company as big as Tokopedia, which has 90 million monthly active users, it could result in a systemic effect,” he said.
Tokopedia’s advantage is its presence in an Indonesian e-commerce market projected to expand from $21 billion in 2019 to $82 billion by 2025, according to a study by Google, Temasek Holdings Pte and Bain & Co. Unlike peers Alibaba’s Lazada and Tencent Holdings Ltd.-backed Shopee, which operate across Southeast Asia, Tokopedia has chosen to expand deeper into rural areas of Indonesia, an archipelago of more than 17,000 islands where online shopping is still relatively under-developed.
“Indonesia’s e-commerce penetration is still 4% to 5%, so the room for growth is still big,” Tanuwijaya said.