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Indonesia’s GoTo defies market volatility with $1.3bn IPO

Markets
By Sydney Barrett
Reuters

    Reuters

    Anshuman Daga and Stefanno Sulaiman and Fanny Potkin

    SINGAPORE/JAKARTA – Indonesia’s largest tech company GoTo Group defies weak global markets with an IPO of up to $1.3 billion this month.

    Founded last year through the merger of ride-hailing-to-payments company Gojek and leading e-commerce company Tokopedia in Southeast Asia’s largest economy, GoTo counts SoftBank Group Corp, Alibaba Group and Singapore-based sovereign wealth fund GIC among its many supporters.

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    The much-anticipated IPO comes after GoTo secured $1.3 billion in a pre-IPO funding round in late 2021, when the Abu Dhabi Investment Authority stepped in as the lead investor.

    “GoTo is still in the early adoption phase, with market penetration rates relatively lower than in developing countries,” GoTo CEO Andre Soelistyo said at an investor briefing on Tuesday.

    GoTo had reviewed its business performance, market prospects and volatility in global markets caused by the Ukraine crisis before deciding to launch its IPO worth up to 17.992 trillion rupiah ($1.26 billion), company executives said to reporters.

    “When the markets recover, we will be able to enter the markets much faster as a listed company,” Soelistyo said, adding that some investors have agreed to an eight-month lock-up period on stock sales.

    GoTo plans to sell up to 52 billion new Series A shares and is pricing the issue at Rs 316 to Rs 346 per share. It is selling up to 4.35% of its increased capital, according to its prospectus.

    At the high end, it will be valued at nearly $29 billion, making it Indonesia’s fourth-largest publicly traded company. The bookbuilding process begins on Tuesday and ends on March 21st, with April 4th set as the expected listing date.

    The IPO comes despite a fall in global stocks and after companies delayed fundraising plans as the crisis in Ukraine pushes up commodity prices and threatens economic growth.

    TECHNICAL SHARES UNDER PRESSURE

    Investor concerns about profitability have hurt technology stocks. Shares of GoTo’s competitor, internet services company Sea Ltd, are down 75% in five months, while Grab Holdings has fallen 70% since its listing in the United States last year after a $40 billion merger with a blank check company.

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    With over 2.5 million registered rider partners, 14 million registered dealers and 55 million annual active users as of September 30th, GoTo’s businesses span the millions of small and medium sized businesses that make up the Indonesian economy.

    “We are happy to have a front row seat and witness the Indonesian dream. Given its size and scope, GoTo is the real test for the Indonesian exchange,” said Willson Cuaca, co-founder of East Ventures and early supporter of Tokopedia.

    Southeast Asia’s internet economy is projected to double to a gross merchandise value of US$360 billion by 2025 by the end of 2021, prompting GoTo, Grab and Sea to all scale up.

    GoTo executives remain optimistic about growth prospects.

    “Indonesia is one of the largest and most exciting emerging markets in the world, which is reflected in the resilience of our capital market this year against the backdrop of global market volatility,” Soelistyo said.

    The commodity-heavy Indonesian market is bucking a global downtrend, with the local index up 5% so far this year after climbing to a record high in recent weeks.

    Last year, Indonesia’s IPO fundraising surged to its highest level in a decade, fueled by investor interest in tech companies, which led to an unexpectedly large $1.5 billion IPO of e-commerce firm Bukalapak in August. dollars led.

    Soelistyo said GoTo has a clear path to profitability but declined to provide any guidance.

    GoTo’s pre-tax losses rose 7% year-on-year to Rs 12.3 trillion in the nine months to September.

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    Since the COVID-19 pandemic, food delivery, e-commerce and payment services in Indonesia have seen explosive growth, and investors have rushed to support fast-growing businesses.

    GoTo announced that its pro forma gross income grew at a compound annual growth rate of 56% between 2018 and 2020 and at 55% year over year in the third quarter of 2021. 30

    The company is the first company to take advantage of multiple voting rights permitted by its regulator.

    PT Indo Premier Sekuritas, PT Mandiri Sekuritas and PT Trimegah Sekuritas Indonesia are the joint lead bookers of the IPO. ($1 = 14,325,0000 rupiah) (Writing by Anshuman Daga; Editing by Stephen Coates, Kenneth Maxwell and Susan Fenton)

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