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    Indonesia, the land of the unicorns

    On April 11, 2022, Indonesia’s PT GoTo Gojek Tokopedia Tbk (GoTo) was officially listed on the Indonesian Stock Exchange and raised around US$1.1 billion, making it the third-largest initial public offering (IPO) in Asia and the fifth largest in the world so far this year.

    By the day’s end, GoTo’s market capitalization was US$32 billion and saw some 300,000 investors participate in the IPO, a record high for the domestic bourse.

    Further, GoTo became Indonesia’s fourth-largest company, behind two banks and a state-owned telecommunication firm. The company has plans for an international IPO although the exact timeline has not been made clear yet.

    Gojek and e-commerce leader Tokopedia

    GoTo or GoTo Group was born from a merger of two of Indonesia’s biggest internet companies — ride-hailing and payments giant Gojek and e-commerce leader Tokopedia.

    The company offers ride-hailing services, delivery, e-commerce, financing, and other services in one super app. As such, GoTo boasts to have 14 million merchants, 2.5 million drivers, and a combined number of actives users (Gojek and Tokopedia) of 100 million.

    Indonesia’s digital economy is home to nine tech unicorns

    GoTo’s strong performance indicates the strength of Indonesia’s digital economy, which is home to eight other tech unicorns. The company is the second unicorn listed on the Indonesian Stock Exchange after e-commerce platform Bukalapak, which was listed in August 2021, raising some US$1.5 billion in what is Indonesia’s biggest IPO.

    Other Indonesian startups eyeing IPOs in 2022 include booking travel companies Tiket.com and Traveloka, interbank network LinkAja, e-commerce platform Blibli, and courier company J&T Express.

    Amid a global economy mired by supply shortages, soaring inflation, high-interest rates, and the Russian invasion of Ukraine, companies have been putting the brakes on planned IPOs.

    The company plans to use the IPO to bankroll an expansion of its services to more markets, primarily in Indonesia where it does enjoy a leadership position being a homegrown entity.

    GoTo has yet to make a profit

    GoTo handled over 414 trillion rupiah (US$29 billion) worth of transactions in 2021, although this still resulted in losses of more than US$556 million from January to July 2021. Like many tech companies in ASEAN, GoTo has yet to make a profit. Before their merger, Gojek and Tokopedia were successful in attracting investments from the likes of Google, Tencent, and Softbank.

    At the height of lockdowns due to the pandemic, GoTo saw gross revenue from its on-demand services stall in 2020; after seeing the figures double in 2019 to US$522 million. However, the company received a revenue cushion from its e-commerce arm, which amounted to US$90 million.

    Shares in other tech companies in the region have struggled since they started trading. Bukalapak saw its share price surge by 25 percent after its debut but has since lost two-thirds of its value. Shares in GoTo’s main rivals Sea and Singapore-based Grab have also plunged with Sea having decreased by 70 percent since October, and Grab, by two-thirds since it made its debut on the Nasdaq in December through a special purpose acquisition company.

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    This article was first published by AseanBriefing which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in China, Hong Kong, Vietnam, Singapore, India, and Russia. Readers may write to [email protected]

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