SINGAPORE/JAKARTA: GoTo is banking for a steady market debut after raising $1.1 billion in a relatively cautious IPO, while a booming local share market is cementing expectations that Indonesia’s largest tech firm can buck a global downtrend in tech stocks.
Formed by the May merger of ride-hailing-to-payments company Gojek and e-commerce giant Tokopedia, PT GoTo Gojek Tokopedia Tbk will debut in Jakarta on Monday in the culmination of one of the world’s biggest initial public offerings (IPO) so far this year.
Taking advantage of new listing rules, the debut will mark a watershed for the $70 billion digital market of Southeast Asia’s largest economy, where record venture funding is creating a wave of startups.
“GoTo is the most differentiated technology company in Southeast Asia. Relative to its peers, diversification is going to be a very important thing that investors will need to get on top of and understand how to properly value the business,” said Shane Chesson, a partner at Openspace Ventures, one of Gojek’s earliest investors.
Indonesia’s digital economy is likely to grow nearly five times to up to $330 billion by 2030 from 2021, showed a study by consultancy Bain & Co and GoTo backers Alphabet Inc and Temasek Holdings Pte Ltd.
While US-listed peers Grab Holdings Ltd and Sea Ltd operate across Southeast Asia, GoTo focuses on Indonesia. With 2.5 million drivers, 14 million merchants and 55 million annual transacting users, GoTo’s businesses straddle millions of small and mid-sized firms across the archipelago.
Angus Mackintosh, founder at CrossASEAN Research, said in a report on Smartkarma that key to GoTo’s IPO was that it was small and offered only to local investors. “This should mean that there is stronger support.” GoTo is selling 4% in shares with most taken up by funds. Backed by names such as SoftBank Group Corp’s Vision Fund 1, Alibaba Group Holding Ltd and the Abu Dhabi Investment Authority, GoTo is also broadening its investor base by allocating shares to 600,000 drivers.
It will also be first to issue multiple class voting shares and tap new rules allowing unprofitable firms to list directly on the bourse’s main board.
Analysts said the size and valuation are lower than expected, and that GoTo likely aimed to avoid a repeat of the experience of e-commerce peer PT Bukalapak.com Tbk.
Bukalapak raised $1.5 billion in July selling 25% of equity after initially targeting $300 million. Its stock debuted strongly but tumbled 25% within days and has halved from its IPO price.
GoTo priced its shares at 338 rupiah ($0.0235), the high end of its indicative range. Its investors are subject to an eight-month lock-in, or two years for those with multiple class voting shares. With Bukalapak, though there was an eight-month lock-in, some funds could sell up to 10% of holdings immediately.
GoTo will become Indonesia’s fourth most-valuable firm at $28 billion, with analysts estimating an index weighting of up to 9%.
“Once you’re in the index, all the local funds buy quasi automatically,” said one GoTo investor. The IDX is at a record high and is Asia’s best-performer this year at 9%.
GoTo President Patrick Cao said weak markets prompted caution with pricing. Still, the firm expects listing to support fundraising and plans to list overseas within two years.
“It is a very challenging environment in the public market now, with market caps of DiDi Global Inc, Grab, DeliveryHero and many others falling below the target valuation of GoTo,” said Jianggan Li at advisory Momentum Works.
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