Tough road ahead as Indonesian e-commerce firm Blibli gears up for mega IPO

AS Indonesia’s third unicorn to list readies itself for an initial public offering (IPO), market watchers and analysts are not holding their breath in terms of the expected performance of the stock in the near term.

Given the performance of the two other tech giants to have listed on the Indonesia Stock Exchange (IDX), market analysts do not expect e-commerce unicorn Blibli to do well post-IPO.

“Despite Indonesia being one of the best performing stock markets in the region, it will be very tough for Blibli to raise US$500 million from retail investors,” noted an analyst, who asked not to be named. “This is largely due to the performance of the two previous e-commerce IPOs.”

Blibli is aiming to raise 8.17 trillion rupiah (S$737.5 million) through the listing, which would place it as the third-largest IPO on the IDX. The two previous tech IPOs were superapp GoTo’s US$1.1 billion listing earlier this year and e-commerce Bukalapak’s US$1.5 billion listing in 2021.

However, Bukalapak has lost 66 per cent of its value since listing while GoTo is approaching the end of the eight-month lock-up period with insiders noting the company has appointed investment bank Goldman Sachs to “smoothen the downside by doing a placement at 180 rupiah per share”.

Currently, Indonesian investment firm Global Investama Andalan (GIA) owns a 98.46 per cent stake in Blibli, while 163 investors own 1.45 per cent. The remainder is shared among five executives including CEO and co-founder Kusumo Martanto, according to the company’s prospectus.

Following the IPO, GIA’s ownership will fall to 83.69 per cent, and the 163 investors will hold 1.23 per cent.

The performance of previous unicorn listings, however, is not worrying Martanto. He told The Business Times in an email interview that its strong ecosystem and direct partnerships with brand principals and distributors will give it an edge over its main competitors.

“With Tiket.com and Ranch Market, Blibli has fortified its position as leading Indonesia’s integrated commerce and omnichannel lifestyle ecosystem,” he said.

Tiket.com is a pioneer and leading online travel agent while Range Market is a premium supermarket chain.

The IPO, he added, will enable the company to grow the business sustainably in the future, including providing incentives to management and employees to attract more talent, which will give the company more competitive advantage and enhance its transparency and corporate governance.

Being backed by the Djarum Group, one of Indonesia’s largest conglomerates, will not hurt either, said Martanto.

While the short-term outlook for e-commerce stocks may not be bright, the longer term forecasts indicate a continued upside for online spending. Based on GfK reports on online spending penetration in the Asia-Pacific region, Indonesia’s online penetration is still relatively low at 17-18 per cent, compared to China (45 per cent) and Singapore (28 per cent).

“Specifically for leading categories such as consumer electronics, in which Blibli is the leader, Indonesia’s online penetration is still below 30 per cent,” he said. “Looking at these figures we believe there is still an enormous potential for the online market in Indonesia.”

As such, Blibli will focus on generating “strong, high-quality and sustainable growth balanced with healthy profitability,” said Martanto. “Our omnichannel business model is unique, which focuses on B2C (business to consumer) and has been proven to be sustainable and profitable in other parts of the world.”

When asked if Blibli would expand beyond the digital sector, Martanto noted that the company has an e-commerce platform, online travel agent and a premium supermarket chain within its ecosystem.

“These three sectors still have sizeable potential growth in the future,” he said. “Based on a survey conducted by Frost & Sullivan in 2021, these three sectors can potentially grow to US$436 billion by 2025 and our three current platforms can fulfil this addressable market within our ecosystem.”

Blibli’s IPO will further enhance the IDX as it continues to attract the country’s high-growth tech startups to list locally by showing that the exchange has the liquidity and execution capacity for these companies, said IDX Commissioner Pandu Sjahrir.

To attract more local listings, Indonesia recently introduced tax rules that make it attractive for local firms to go public domestically before seeking an overseas listing.