Gojek buys 22% stake in Indonesia's S$4b Bank Jago

GOJEK has bought a 22 per cent stake in Indonesia's Bank Jago, a move which it says will allow some of its users access to digital banking services through the ride-hailing operator's platform.

As at Dec 18, Bank Jago had a market capitalisation of 42.3 trillion rupiah (S$4 billion). This values Gojek's stake in the digital bank at 9.3 trillion rupiah (S$880 million).

According to an Indonesia stock exchange disclosure on Friday, Gojek's fintech arm GoPay purchased around 1.96 billion additional shares in Bank Jago for 1,150 rupiah apiece, to increase its stake in the digital bank.

The US$160.4 million transaction gives GoPay an overall 22.2 per cent stake in Bank Jago, up from 4.1 per cent previously.

Gojek's Indonesia users will be able to open a bank account with Bank Jago and manage their finances through its app, it said in a statement on Friday.

The strategic investment into Bank Jago comes after competitor Grab's successful bid with Singtel for a full digital banking license in Singapore. These digital banks are slated to emerge onto the city-state's banking scene starting early 2022.

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The Bank Jago deal represents a huge opportunity, the ride-hailing operator said. "(Indonesia) also has a high smartphone penetration rate of 70 to 80 per cent, which makes the population infrastructurally ready for digital banking."

Indonesia is home to the world's fourth-largest unbanked population, where 52 per cent of adults, or about 95 million people, do not own a bank account. A further 47 million adults are underbanked or have insufficient access to credit, investment and insurance.

The deal, which was made through its payments and financial services arm, will not alter the control of Jago, it said. Metamorfosis Ekosistem Indonesia and Wealth Track Technology, which have a combined ownership of 51 per cent, will continue to be Jago's controlling shareholders, it noted.

The Bandung-based lender Bank Jago was formerly known as Bank Artos. Patrick Walujo, co-founder of Gojek backer Northstar Group, had bought a 13.4 per cent stake through Wealth Track Technology in December last year, according to filings from the Indonesian Stock Exchange.

Word on the street then was that Bank Artos will later become a digital bank that will handle Gojek transactions.

Gojek co-chief executive Andre Soelistyo, said: "Our partnership with Jago...is a key part of our strategy and will underpin the growth and sustainability of our business in the long term."

He added that the collaboration with Bank Jago, an Indonesia-listed technology bank, can allow Gojek to "develop a process through which we can work with other banks".

The aim is to leverage more partnerships like this, Mr Soelistyo said.

Bank Jago's president director, Kharim Siregar, noted that the partnership perfectly complements Bank Jago's deep expertise and understanding of the financial needs of Indonesians.

He said: "As a bank designed with an open API (application programming interface), we will go on to work with multiple digital ecosystems to reach a wider audience and drive our aspiration to enhance the finances of millions of people through digital financial solutions."