Vantage Point: GoTo’s capital raising plan may take pressure off near-term US listing

Photo: GoTo website

This weekly newsletter highlights top developments and trends across Southeast Asia’s digital economy and ecosystem, without losing sight of the solid links between the online and offline worlds.

Executive Summary

  • GoTo – Off the fundraising hook for now
  • Allo Bank pursues super app strategy
  • Bersama as Saratoga’s digital economy proxy

GoTo – Off the fundraising hook for now

Indonesia-listed GoTo’s plan of raising additional capital through private placement of shares, representing around a 10% stake in the company, will help to lift concerns about its ability to raise new capital or the need for a near-term listing in the US, given obviously difficult market conditions. 

The company, which decided to go ahead with a domestic market listing despite trying market conditions earlier this year, consciously kept a relatively small free float of less than 5%. 

The IPO in Jakarta raised a total of $1.1 billion while the sale of 118.4 million or 10% new shares in the company would have a value of $2.45 billion at the current share price. Although the price has not been disclosed, it seems very likely that the new issue will be twice the size of the local IPO.

The planned stake sale, pending approval, is expected to be executed within a year.

However, the capital-raising plan does not mean that GoTo will not seek a US listing at some point in the future given the market depth and appetite for tech stocks. This move should help the company sustain higher valuations and access a larger pool of funds.

GoTo, which will announce its earnings soon, will provide a real insight into its performance in not only 4Q2021 but also 1Q2022. These were both periods of significant change in terms of mobility and food delivery, reflected in competitor Grab’s results.

It will be interesting to see how the Gojek mobility and food delivery business in Indonesia has fared since mobility restrictions have been lifted. Normally one might expect mobility to show improvements but food delivery potentially slows down as people eat out more. 

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