GoTo IPO aims for 18t rupiah, but timing raises questions

Jakarta

TIMING is a crucial factor in determining the success or failure of an initial public offering (IPO) and given current global sentiment towards tech companies, Indonesia's GoTo's decision to float is being questioned by market watchers.

The country's biggest tech firm announced its public offering yesterday, aiming to raise 17.992 trillion rupiah (S$1.69 billion). This would make it the second-largest domestic offering in the country.

"GoTo is still in early adoption, with market penetration rates relatively lower than other developing countries," Andre Soelistyo, the company's CEO told an investor briefing yesterday.

The tech firm, a merger between ride-hailing to payments firm Gojek and e-commerce leader Tokopedia, said in its prospectus that it plans to sell 52 billion new Series A shares (up to 4.35 per cent of its enlarged capital) and is setting a price range of 316 rupiah to 346 rupiah per share for the issue.

GoTo will also conduct a serial rights issue for 10 years after the effective date by offering 1.5 per cent per year in each rights issue. The company will also seek a dual listing by selling 10 per cent of its enlarged capital on an exchange outside Indonesia. Its management however did not elaborate on which global stock market it would list on.

"I think this is not the best time for GoTo to announce its IPO as tech companies globally are under pressure," said Paulus Jimmy, a tech analyst at Sucor Sekuritas. "Share prices of tech companies such as Tencent and Alibaba have been declining and Grab is also facing investor scrutiny after its SPACs listing in New York."

He added that GoTo presented a strong story during its presentation and the company has a strong ecosystem which its competitors do not enjoy.

Harry Su, managing director of Samuel Sekuritas noted that GoTo will also have to contend with investor scepticism given the earlier experience with e-commerce platform Bukalapak which has seen its share price fall 73 per cent since listing last year.

"I believe both Grab and Buka have become a bad precedence and would apply a cap on the GoTo IPO pricing," said Su. "Valuations are not cheap but the Goto IPO could be successful due to its huge index weighting."

GoTo would be among the top five market cap stocks listed on the Indonesian Stock Exchange if it achieves its stated price range. At the top end, the company would be valued at US$29 billion.

After yesterday's announcement, the company will start the book building process which ends on March 21 with April 4 set as the estimated listing date.

The widely expected IPO comes after GoTo secured over US$1.3 billion in pre-IPO funding from investors including Alibaba Group, SoftBank Group and Singapore sovereign wealth fund GIC in 2021.

Despite the global uncertainty given the war in Ukraine and rising commodity prices, GoTo executives were upbeat on the prospects for growth, especially in the country's booming digital economy.

However, like the last unicorn listing Bukalapak, GoTo is still loss making. The company lost 8.2 trillion rupiah in the first seven months last year, versus a 11.3 trillion rupiah loss in the same period the year earlier.

According to financial data provided by Indo Premier, the company will continue to make losses until at least 2024. But it showed strong growth in its operations with gross transactional value (GTV) at 414 trillion rupiah in the 12 months ending Sept 30, 2021, compared with 330 trillion rupiah in GTV in 2020.

Between 2018 and 2020, GoTo's revenue rose 56 per cent on average each year. It reported a revenue of 15.2 trillion in the 12 months ending Sept 30,2021.

The company has appointed PT Indo Premier Sekuritas, PT Mandiri Sekuritas and PT Trimegah Sekuritas as joint underwriters for the IPO.

• Garage is BT's startup vertical. Read more news, analyses and opinions at bt.sg/garage

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