Indonesia’s GoTo raises $150m from IFC, Franke & Company via convertible bonds

Indonesia giant tech company PT GoTo Gojek Tokopedia Tbk (GoTo) has raised an investment of $150 million from World Bank member International Finance Corporation (IFC) and US-based private equity (PE) firm Franke & Company, according to a company statement.

IFC has contributed $125 million in the round while Franke & Company has invested the remaining portion.

The funding follows the private placement plan that obtained approval in June 2023.

As part of the plan, GoTo, through its entity GoTo Financial International Limited, has issued less than 17.04 billion shares to Bhinneka Holdings, which will concurrently issue equity-linked bonds to IFC and Franke & Company.

The proceeds will be received through the issuance of new shares via a non-preemptive capital increase, and structured private notes to an independent entity, Bhinneka Holdings Limited.

The bonds issued by Bhinneka Holdings are exchangeable into Series A shares of the company at an exchange price of 135 rupiah apiece, representing a premium of 50% to the one-month volume weighted average price of the shares up to and including 2 October 2023. 

The equity-linked bonds have a coupon of 5% per annum payable semi-annually and will mature in October 2028.

Commenting on the development, BRI Danareksa Sekuritas analyst Niko Margaronis said, the investment, through exchangeable bonds, minimises shareholder dilution and demonstrates confidence in GoTo’s future performance.

IFC’s strategic investment in GoTo reflects a shared vision to enhance access to new opportunities across Indonesia. The parties will collaborate on driving financial inclusion in Indonesia, where 97 million adults remain unbanked, as well as strengthening and refining GoTo’s ESG execution strategy. 

“This partnership will provide additional support for our business as we seek to improve life for our customers, including consumers, driver partners and merchants, enabling them to achieve their financial goals and dreams,” said GoTo CEO Patrick Walujo in the statement.

The funding from the new investors will be used for GoTo and its entities, including GoPay, Swift Logistic Solutions, Multifinance Anak Bangsa and GoTo Solusi Niaga.

The partnership also includes non-financial support to help the company transition its fleet of driver-partners and delivery partners to electric vehicles, improving operational efficiency, and integrating more sustainable business practices to achieve carbon neutrality.

After the announcement, shares of GoTo decreased by 1.18% to 84 rupiah apiece, compared to 85 rupiah apiece the previous day.

Earlier, Bloomberg reported that GoTo terminated its plan to raise funds through a $500-million convertible bond issue. The sources said GoTo had concerns that the debt sale would send a conflicting message to investors. Its initial plan was to raise $1 billion from the bond sale, which was later downsized.

GoTo CEO Patrick Walujo said that GoTo remains on track to deliver positive adjusted EBITDA in the last quarter of 2023 but its objective is to deliver sustainable and profitable growth.

GoTo, narrowed its net loss by 47.5% year-on-year in the six months ended June 30, 2023, showing progress in meeting its target of clocking positive adjusted EBITDA this year.

GoTo said that its losses for the first half of 2023 stood at 7.2 trillion rupiah ($466.6 million), compared with 14.2 trillion rupiah in the same period of 2022. GoTo’s losses for the April-June period (Q2 2023) came in at 3.3 trillion rupiah, down 56.1% compared with the same period a year earlier.

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