Grab backs LinkAja in latest twist to e-wallet war against Gojek
This is Grab's salvo against Gojek's GoPay; LinkAja is backed by state-owned enterprises
Singapore
THE fierce e-wallet war between Grab and Gojek in Indonesia has gone up a notch, with Grab gaining a stake in an Indonesian e-wallet backed by state-owned enterprises (SOEs).
On Tuesday, Grab announced that it is leading a Series B round of up to US$100 million in commitments into Indonesia's state-backed e-wallet, LinkAja. Grab is a minority investor.
The round is joined by three Indonesian heavyweights: domestic telco Telkomsel, BRI Ventures, the venture arm of state bank BRI, and Mandiri Capital Indonesia, under Bank Mandiri.
This marks LinkAja's first external investment from a private company, as well as a fresh salvo from Grab against Gojek's e-wallet, GoPay.
Indonesia's e-wallet scene is dominated by domestic services GoPay and Ovo. Ovo is backed by Grab and integrated into Grab's Indonesian app. Market research has it that LinkAja may not be a strong contender to GoPay or Ovo for market share.
But LinkAja has a strong shareholder base of SOEs, which could be an advantage, said Joel Shen, a special counsel at Withers KhattarWong who is experienced in Indonesian tech.
The firm was formed last year through a merger of the e-wallets of Telkomsel, Bank Mandiri, BRI and BNI. Its other shareholders include financial services firm Danareksa, oil and gas firm Pertamina and insurer Jiwasraya.
"I think there is definitely strategic value in the investment, even if the value is to allow Grab to consolidate its market share in the digital wallets and e-wallets space," Mr Shen said.
And interestingly, both Grab and Gojek were said to have been competing to invest in LinkAja, going by a July KrAsia report that cited sources close to the matter.
Grab and Gojek had declined to confirm the report.
The next development to look out for in the e-wallet war would be a merger of Ovo with another smaller operator, Dana, in a deal said to be in the late stages of negotiations. If it passes, this deal could give Grab an even stronger foothold against GoPay.
In its Tuesday statement, LinkAja said it will use the fresh funding for its growth plans, focused on serving middle-class Indonesians and micro, small and medium-sized enterprises (MSMEs) in the country.
Neneng Goenadi, managing director of Grab Indonesia, said that the firm "chose to invest in LinkAja because we believe that together, we can help accelerate our shared goal of improving financial inclusion" in the country.
LinkAja claims to have more than 58 million registered users, with over 80 per cent from Indonesia's Tier 2 and 3 cities.
Grab's LinkAja deal also comes as the firm is stepping up direct investments into Indonesia, with the launch of a tech centre to innovate solutions for MSMEs in South-east Asia.
In a speech at the launch of the tech centre on Tuesday, Grab chief Anthony Tan said his firm wants to enable digital and financial inclusion in Indonesia, "one of our two headquarters".
"With our tech centre, we're going to invest more into local tech talent development and groom the next generation of Indonesian tech leaders ... Grab is here to contribute to Indonesia on her path to economic recovery," he said.
