GoTo rises 14.8% on IDX debut, draws record number of investors

SHARES of Indonesian tech giant GoTo Group soared 14.8 per cent to 388 rupiah upon its debut on the Indonesia Stock Exchange (IDX) on Monday (Apr 11), valuing the company at US$31.6 billion.

This marks yet another major tech initial public offering (IPO) in South-east Asia. It is also the first Indonesian listing to benefit from the country's new regulations that allow dual class shares.

Trading under the ticker GOTO, the stock rose to a high of 416 rupiah minutes from its debut, but later slid back below the 400 rupiah mark. It ended the day at 382 rupiah, up 13 per cent. Some 300,000 investors have participated in the IPO, a record high for the domestic bourse.

GoTo has plans for an international IPO next, but the timing is not set as it will need to look at market movements, chief executive Andre Soelistyo said at a Jakarta press conference late Monday morning. The company was formed last year via the merger of ride-hailing and food delivery unicorn Gojek and domestic e-commerce player Tokopedia. Widely seen as Indonesia's most high-profile tech company, its backers include Alibaba Group and the Softbank Vision Fund. Beyond its home turf, GoTo also operates ride-hailing services via Gojek in Singapore and Vietnam, and also does food and parcel delivery in the latter market. GoTo will now focus more on bringing more of its ecosystem to international markets, said co-founder Kevin Aluwi. "Our business potential in Singapore is still very big because we've done it for just a few years," he said.

The IPO has raised US$1.1 billion, with US$954.7 million in proceeds and US$146.3 million from treasury shares, for over-allotment purposes. GoTo kicked off its offering period from Apr 1 at a projected market cap of US$28 billion - lower than the US$35 billion to US$40 billion it was previously said to be aiming for.

The company offered 46.7 billion shares at 338 rupiah each, of which 40.6 billion were primary shares, down from its original plan to offer 48 billion shares.

Asked why GoTo downsized its offering, Silva Halim, managing director of joint lead underwriter Mandiri Sekuritas, said that the company had received "sufficient" demand to price its shares at the upper half of its indicated range.

Adding that the company has a strong balance sheet, she said that the offer size will reduce dilution for existing shareholders. GoTo also allocated US$20 million worth of shares and cash to its gig workers. Its Indonesian drivers registered between 2010 and 2016 are getting 4,000 shares, worth US$94 based on the IPO price and with an 8-month lock-up period. Those registered between 2017 and February are receiving 1,000 shares, while drivers in Singapore and Vietnam are receiving cash.

The company forged ahead with its listing despite volatile economic conditions and investor scepticism of loss-making tech stocks. Indonesian e-commerce peer Bukalapak surged 25 per cent upon its domestic listing last August, but has since tumbled 69.1 per cent, as of Monday.

Fellow regional unicorns Grab and PropertyGuru have similarly been hit by weak market sentiment since going public in the US via mergers with special purpose acquisition companies (SPACs). As of Friday (April 8), Grab is down 70.9 per cent from its debut price, while PropertyGuru is down 13.8 per cent.

GoTo's domestic IPO is small and involves local institutional and retail investors, which could mean stronger support, CrossASEAN Research analyst Angus Mackintosh said in a Mar 29 note published on research platform Smartkarma.

"There will also be no involvement from hedge funds, at least at the early stage, which may mean less volatility in the short-term, given the lack of opportunity to borrow stock for shorting activity," he said.

But the company could have a strong impetus to raise further funding soon, potentially through a US IPO. Mackintosh noted that GoTo has an estimated cash burn of US$2.2 billion in 2022, and US$1.7 billion in 2023.

The company has previously announced that it will seek a dual listing by selling 10 per cent of its enlarged capital on an exchange outside Indonesia, although it did not specify the market. It has also indicated plans to conduct an annual rights issue for 10 years, offering 1.5 per cent per year in each issue.

"The need to raise new funds in the medium-term presents a potential risk but (we) would see this as a tail risk, given the strong position of the company as the key proxy for the Indonesian digital economy," Mackintosh said in his report.

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