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GoTo: Will It Achieve Investors’ Ambition?

Updated: May 22, 2021

On Monday (5/17), the two largest technology companies in Indonesia, Gojek and Tokopedia, officially announced to synergize and combine business by creating the GoTo Group. The merger between the startup unicorn and decacorn of Indonesia is certain to be able to multiply the valuation value and increase control of the Indonesian economy and markets. GoTo declares to be the backbone of the community’s ecology, providing a variety of solutions for day-to-day living through the GoTo ecosystem for daily life. This merger will include e-commerce, on-demand, and financial services, whilst being the first platform in Southern Asia to accommodate the three important cases in one ecosystem. The GoTo Group is Indonesia’s greatest commercial collaboration to date, as well as Asia’s largest partnership between two internet and media service companies. Patrick Cao, the President of GoTo from Tokopedia, said that the future business model for GoTo will be more diverse, stable, and sustainable as it will contribute more than 2% of the Indonesian GDP. "Going forward, the GoTo Group will contribute more than 2 percent to Indonesia's total GDP and will create more jobs and income opportunities as our business grows and the economy grows," Patrick said in a press release, Monday (5/17). This big merger also requires the approvals of each company’s investors. The CEO and Co-Founder of Gojek, Kevin Aluwi mentioned that The GoTo Group has a strong list of investors to support its performance going forward. Amongst many others, some investors of the GoTo Group are Alibaba Group (BABA), Facebook (FB), Google (GOOGL), Northstar (NEIK), Pacific Century Group (P15.SI), and Paypal (PYPL).

Prior to the merger decision, Gojek and Tokopedia’s net worth was estimated at $10.5 billion and $7.5 billion, respectively. Gojek, which has been in operation since 2010, has raised a total of $5.3 billion in financing across 12 rounds. Gojek has also invested in several investments ranging from LinkAja, Bank Jago, Blue Bird Group, ZULU, Rebel Foods, Safeboda, JD.ID, Escapex, PasarPolis, and Pathao. Tokopedia, which was created a year before Gojek, has raised $2.8 billion in 11 funding rounds. Tokopedia was established by 11 investors with its most recent investors being EV Growth and Alibaba Group. The merger of Gojek and Tokopedia certainly raises questions from the public as to when GoTo will list its shares. While there is no certain word on when GoTo will go public, I Gede Nyoman Yetna, Director of Company Assessment for the Indonesia Stock Exchange (IDX), reported that IDX welcomes the GoTo merger and their preparations for an IPO. Nyoman also claimed that GoTo's market capitalization would have a huge effect on the scale of the Indonesian capital market capitalization, making the Indonesian capital market more appealing in the global market. "Through the capital market, GoTo can grow and develop together with company stakeholders who have provided support for GoTo's growth," said Nyoman (5/18). Changing GoTo's status to a public corporation will also help the company improve its profitability by gaining access to external funds. Improved corporate governance would also help corporations in the future, enabling them to be governed more transparently, accountably, and professionally. On the other hand, the inclusion of GoTo in the Indonesia Stock Exchange is projected to bring a major improvement in investor coverage across the coverage of driver-partners, sale partners, and successful consumers who can engage as business investors.

With the plan for an IPO, GoTo’s entry to the Indonesian Stock Exchange will pose as a new milestone for the Indonesian digital economy. Since the technology start-up boom at the beginning of 2010, there has not been a large-scale private technology company in Indonesia that has switched to become a publicly traded corporation until now. In contrast to the United States where many big technology companies such as Facebook, Snapchat and Amazon have become public companies. Furthermore, Andre Soelistyo, CEO of GoTo, explains that GoTo has a goal to encourage financial inclusion in Indonesia and Southeast Asia by increasing income opportunities for Gojek drivers and businesses in Tokopedia. However, according to INDEF (Institute for Development of Economics and Finance) economist, Bhima Yudhistira, GoTo might face major challenges at the Asian level with the presence of other established technology companies such as Alibaba and Tencent. He added. “It is still difficult to predict at the Asian level but it is possible that market share and valuation can increase after the merger in Southeast Asian level, GoTo also has to be aware of the possibility of Shopee and Grab merging. Nevertheless, a member of the Alibaba Group, one of the investor groups that played a part in the process of GoTo merger, said that he was optimistic about GoTo’s business prospects for the Indonesian and Southeast Asian markets. All things considered, if the GoTo IPO with the gross transaction value (GTV) of more than US $ 22 billion can successfully aid the two companies to enhance the various services provided to consumers, it can ultimately bring a positive impact to the capital market and economy of Indonesia. As the arrival of GoTo is pumping the excitement for future investment and will likely bring a positive catalyst towards the capital market in Indonesia, the possibilities of failure still exist. Therefore, investors will still have to stay attentive and watch how GoTo will unfold. Looking up to this circumstance, emerges a question as to how will GoTo successfully achieve investors’ ambition?


CNBC Indonesia

CNN Indonesia

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