GoTo to go public by end-2021; Tokopedia to stay in Indonesia for now
Singapore
INDONESIA'S newly-formed GoTo Group is gunning for the public markets by end-2021, while also planning to double down on "hyperlocal" logistics throughout Indonesia, said its president Patrick Cao over a video call on Tuesday.
Mr Cao was speaking to The Business Times (BT) a day after Gojek and Tokopedia announced their long-awaited merger - a milestone towards both Indonesian companies' ambition to go public.
"On the back of the announcement yesterday, the flood of investor inquiries that we got is pretty cool. I think the momentum and the excitement is certainly there. I'm very optimistic," he said, when asked about investor sentiment.
GoTo may opt for a traditional initial public offering (IPO) or a merger with a SPAC (special purpose acquisition company), Mr Cao said. It is eyeing a dual listing in Indonesia and the United States.
Prior to the merger, Mr Cao was the president of e-commerce player Tokopedia. Andre Soelistyo, who was co-chief executive of Gojek, has stepped up as chief executive of GoTo.
Both unicorns' pre-merger valuations add up to US$18 billion. Asked what valuation GoTo will be targeting in a listing, Mr Cao said that "the markets will decide what the right number is". Grab's upcoming listing will be a key reference point for how the market views SPAC deals, he said.
GoTo's plans come as the window for tech firms going public appears to be narrowing. The SPAC boom has cooled after heightened regulatory scrutiny in the US. Meanwhile, the Covid-19 pandemic continues to rage globally.
But Mr Cao still believes that there is still a "light to quality" among investors. "I think with our differentiated story, our size and scale, we definitely hit that mark," he said.
He reckons that the combined entity will be attractive to investors, given its diverse verticals: e-commerce, ride-hailing, on-demand food delivery and fintech, as well as its strong focus on Indonesia.
That domestic focus has in fact been a point of contention among observers. Tokopedia is only present in Indonesia, while Gojek has expanded modestly, mainly to Thailand, Vietnam and Singapore. While some observers have lauded the focus on the Indonesian market, others have flagged Tokopedia's lack of a regional footprint as a concern.
Asked whether GoTo plans to bring its e-commerce business overseas, Mr Cao said that the company sees value in concentrating on its home market for now.
"E-commerce penetration (in Indonesia) is still in early days, relative to our peers in China and the US. So I think we have a lot of homework to do there, not just in e-commerce, but with hyperlocal logistics and fulfilment," he said.
But he added: "If we can find the right teams and partners in the future, that wouldn't preclude us from expanding."
Hyperlocal logistics is also how Mr Cao sees GoTo standing out from its peers, namely Singapore-based Grab and Sea. The latter's e-commerce unit Shopee has been a particularly fierce competitor to Tokopedia.
Same-day delivery is one strategy that GoTo hopes to tap to beat the competition. By combining Tokopedia's e-commerce offerings with Gojek's last-mile fleet, GoTo hopes to muscle in on same-day deliveries, especially for areas outside of Jakarta.
At present, about two-thirds of Tokopedia's deliveries are next-day, but Mr Cao hopes to raise the proportion of same-day deliveries.
He declined to cite a specific target, but said that plans are "pretty aggressive".
GoTo will also continue to invest in core logistics infrastructure, both in terms of warehouses and manpower.
The other big battleground for GoTo lies in fintech. In Indonesia's e-wallet scene, GoTo's GoPay is up against Grab-backed Ovo and Sea's ShopeePay wallet.
Tokopedia is in fact also a shareholder of Ovo, Mr Cao acknowledged, but he said that with the merger, the company is now exploring a divestment of its stake.
Mr Cao is nevertheless bullish on GoPay's prospects. He expects that having e-commerce data will supercharge the prospects for more value-added financial services.
"That also translates into very powerful credit scoring, which is going to be hugely important, as digital payments accelerate... and I think that's also a gateway for things like micro-insurance. Now we can provide cohesive products, like what you see in China," he said.
He believes that GoTo's partnership with Bank Jago, in which Gojek owns a substantial stake, will further brighten prospects.
In any case, Mr Cao's immediate priorities for now are ensuring a smooth integration of both companies' operations. Investor education on the Indonesian market's potential will be another core focus, Mr Cao said. "We have a few months to do that," he said.
Indeed, GoTo's next steps ahead of its listing will be closely watched by the industry.
Reshmi Khurana, managing director and head of South-east Asia at Kroll, agreed that logistics is a clear-cut synergy that GoTo will enjoy with the merger of both businesses. The more complex angle for the company to master lies in fintech, she said.
"The key synergy that I'll be watching is, does this combination help them accelerate technological innovation in the financial services space, to allow them to truly become full-service financial institutions? And not just a large e-commerce company getting larger," she added.
Patrick Stokvis of research firm Third Bridge is similarly watching the fintech angle, especially on how GoPay will compete with Sea's ShopeePay.
"What we've seen and heard is that ShopeePay has been quite aggressive in this space, while GoPay and Ovo have actually scaled back some of their marketing expenses. This has actually been quite helpful for ShopeePay to pick up some market share," he said.
But with Tokopedia in the picture now, Mr Stokvis is looking at how the dynamics will change.
"We believe that the GoTo ecosystem should be able to complete the missing piece of e-commerce that GoPay had lacked before, and will better help it strengthen its competitive position," he said.
- Garage is BT's startup vertical. Read more news, analyses and opinions at bt.sg/garage
