Gojek and Tokopedia, Indonesia’s two most valuable tech companies, on Monday announced they are merging their businesses in what is the country’s largest-ever business deal.
GoTo Group, the combined entity, will offer everything from e-commerce to on-demand services, such as ride-hailing and food delivery, and financial services.
The transaction, which follows months of negotiations and comes ahead of a planned IPO, is the largest between two Asia-based internet media and services companies to date, according to a joint statement.
What GoTo looks like
GoTo will be the holding company under PT Apilaksi Karya Anak Bangsa, the legal entity under which Gojek is registered.
GoTo will house three independent subsidiaries – Gojek, Tokopedia and GoTo Financial, a new financial services and payments brand that comprises GoPay as well as the group’s merchant and financial services offerings.
Gojek co-CEO Andre Soelistyo will lead the combined business as GoTo Group CEO, with Tokopedia president Patrick Cao serving as GoTo Group President.
Kevin Aluwi will continue as CEO of Gojek and William Tanuwijaya will remain the CEO of Tokopedia, the companies have announced. Soelistyo will lead GoTo Financial.
“Today is a truly historic day as we mark the beginning of GoTo and the next phase of growth for Gojek, Tokopedia, and GoTo Financial. Gojek drivers will deliver even more Tokopedia packages, merchant partners of all sizes will benefit from strengthened business solutions and we will use our combined scale to increase financial inclusion in an emerging region with untapped growth potential,” said Soelistyo in a statement.
“We have Gojek’s high volume, high-frequency mobility transactions, combined with Tokopedia’s high-value, medium frequency e-commerce transactions. GoTo Group will account for more than 2% of GDP in Indonesia and we’re going to create a lot more employment and income-earning opportunities as our company and the economy expand,” said Cao.
GoTo registered group gross transaction value (GTV) of over $22 billion and over 1.8 billion transactions in 2020. The combined entity had over two million total registered drivers and more than 11 million merchant partners on its platform as of December 2020.
GoTo will continue to focus on markets where Gojek already operates, including Vietnam, Singapore, and Thailand.
Dual listing by year-end
GoTo is preparing for a dual listing in the US and Indonesia before the end of the year, Cao said during a media briefing on Monday.
Tapping public market capital will help GoTo build up its war chest to take on publicly listed rival Sea Group as well as Grab, which has announced plans to go public in the US via a merger with blank-cheque company Altimeter Growth at a valuation of nearly $40 billion.
GoTo could similarly seek a public market valuation of $35-40 billion, according to sources.
But first, more private capital
GoTo is also seeking to close a pre-IPO funding round, Cao said in response to media queries. GoTo’s valuation is at least over $18 billion based on independent valuations of Gojek (valued at $10.5 billion) and Tokopedia ($7.5 billion) before the merger.
Since the launch of its app in 2015, Gojek has raised over $5 billion in funding from top investors including Google, Facebook, PayPal, Tencent, and Visa. Meanwhile, e-commerce giant Tokopedia has garnered around $2.8 billion from Alibaba Group, SoftBank, Google, Sequoia Capital India, and many more.
Tokopedia to divest OVO stake
As part of the merger, Tokopedia will divest its stake in payments major OVO, which is partly owned by Gojek rival Grab, GoTo president Cao said on Monday. DealStreetAsia had last month reported the company’s divestment plans.
Tokopedia owns a 36.1% stake in OVO parent Bumi Cakrawala Perkasa through its wholly-owned subsidiary Digital Investindo Jaya. Its co-founders Leontinus Alpha Edison and William Tanuwijaya own another 5% stake in Bumi through PT Wahana Innovasi Lestari that was acquired from Grab in February 2020.
Bank Indonesia’s rules bar an entity from holding a controlling stake in more than one digital wallet in the country. The central bank norms thus prevent GoTo from becoming an owner in both OVO and Gojek’s payments platform GoPay.