GoTo casts wider net for investors as it extends IPO deadline

Jakarta

INSTEAD of just delivering food and packages, as many as 600,000 Gojek drivers in Indonesia now have an opportunity to be shareholders of the company they represent under GoTo's Gotong Royong Share Program.

GoTo, the company formed after a merger between Gojek and e-commerce platform Tokopedia, earlier this week announced that it was extending the deadline for consumers and merchants to subscribe to its IPO to Mar 24, from the earlier deadline of Mar 15-21.

Whether the Gojek drivers will in fact buy the shares remains to be seen but the move has received a mixed response from market players who told The Business Times that the GoTo IPO may not be as exciting to investors as earlier anticipated.

While the company has described the move to extend the deadline for its book-building as an effort to provide merchants and consumers a greater opportunity to acquire GoTo shares, some analysts noted that institutional investors and fund managers are feeling nervous.

"A lot of people are jittery as many funds are not able to value the company," said one broker with a Jakarta-based securities firm. "The fear is that investors may sell the shares as soon as the company is listed."

He added that many retail investors lost money during Bukalapak's initial public offering last year and the recent experience of Grab's shares tumbling had spooked investors.

GoTo's corporate secretary RA Koesoemohadiani, however, told local media that the extension of the deadline was in response to higher than expected demand from consumers and merchants who have received a fixed allocation through the Gotong Royong Share Program.

"This is particularly important given that this is the first of its kind in Indonesia and our consumers and merchants may therefore need more time to better understand the order mechanism, consider their investment decision and submit their orders," he said.

Bernard Wijaya, the CEO of Sucor Sekuritas, concurred with GoTo's explanation on why it had extended the deadline.

"This book-building extension will only apply for the share programme and retail investors. For institutional investors, there will be no extension to the book-building period, as it will still be closed on the afternoon of Mar 21," he said.

"I don't think it reflects lack of interest among institutional investors because the main reason why GoTo extended the book-building period is for their merchants and users."

Wijaya added that newbie investors, especially, might require time to learn more about the prospectus before they make an investment decision.

Commenting on whether GoTo's IPO was wrongly timed given the recent examples of Bukalapak and Grab, Wijaya said investors should take a closer look at the company's business model and ecosystem, which are very different from Bukalapak and Grab.

"GoTo has enough differentiators to contrast itself from, for instance, Bukalapak. GoTo has a complete and well-rounded ecosystem that is not just a sum of 3 parts. They actually integrate and collaborate together to make their customers stick to the platform and use the services offerings more," he noted.

"This cannot be found in other ecosystems which may serve only one or two parts of what GoTo has. Also, what potentially attracts more investors is the effort made by GoTo to build confidence and trust from investors, such as offering a greenshoe mechanism to maintain price stability, as well as the multiple voting shares, which is partly used to lock existing shareholders and investors from cashing out," he added.

GoTo's IPO will be a watershed for Indonesia's booming digital economy as more tech startups look to the capital markets for funding.

Investors, however, need to have the confidence that the pro-growth strategy of tech stocks can in time translate into profits and thus capital gains.

"This process takes time, so tech companies are shooting for the long run," said Wijaya.

"They may be booking losses at the earlier stages of growth, primarily due to significant investments that they spend to scale their businesses up. Businesses that can really take off with a significant customer and partner base, as well as service offerings, will usually have a clearer path to profitability, be it through increasing revenue or monetisation, or more efficient expenditure."