GoTo Listing Soon in Indonesia: What You Should Know

2022 is set to be an interesting year for tech companies. Indonesia is currently expecting one of the largest IPO by the biggest tech company in the country, GoTo, which is expected to happen somewhere in the first semester of 2022. 

The fate of this big tech IPO is going to be interesting. For one, it was preceded by the IPO of another tech company, E-Commerce Bukalapak, which also garnered a lot of interest from the market but soon after the IPO saw a decline of almost 75% from its All-Time High price. Of course, this would make some investors wary of big tech IPOs but let’s explore why things could be different for the GoTo IPO.

The Powerhouse of Indonesian Economy

People were doubting the performance of Bukalapak because its presence in the E-Commerce marketplaces was not as large compared to the other big players in the market. The same cannot be said for GoTo. They are respective leaders in all of their verticals: food delivery and ride-hailing by Gojek and E-Commerce marketplace by Tokopedia. Combined, they have more than 100 million Monthly Active users and over 11 million merchants which make their market presence very superior. Their products are actually used by most of the population and have become essential which can be seen from GoTo contributing almost 2% of Indonesia’s GDP. Not to forget the financial sector of GoTo which empowers the digital economy by providing financial services to consumers and SMEs.

The Supporters Of The Future

The announcement of the GoTo merger quickly took the world by storm. For your information, GoTo has received funding from notable investors worldwide such as Alibaba Group, Astra International, BlackRock, Capital Group, DST, Facebook, Google, JD.com, KKR, Northstar, Pacific Century Group, PayPal, Provident, Sequoia Capital India, SoftBank Vision Fund 1, Telkomsel, Temasek, Tencent, Visa, and Warburg Pincus. The interest from these investors shows the potential of GoTo as a company.

One notable company amongst the investors is Alibaba which owns a 12.6% stake in GoTo. The business model of both GoTo and Alibaba is quite similar. Alibaba has started and achieved great success in building the super app ecosystem in China. Their valuable insights will certainly help GoTo as they expand across the Southeast Asia region and Alibaba is very optimistic about the potential of GoTo in the future.

The Pillars of the GoTo Ecosystem

The GoTo ecosystem is divided into 3 pillars, containing a diverse set of companies. In the E-Commerce sector, they have Tokopedia as one of the largest marketplaces in Indonesia. Gojek also provides on-demand services such as ride-hailing and food delivery services with their Go-Ride and Go-Food services respectively. Spearheading these companies is GoTo Financials. Take for example Bank Jago which helps distribute loans to users and merchants of Gojek and Tokopedia. There are other companies like Moka which provides complete and easy-to-use Point Of Sale applications and Midtrans which provides a diverse payment solution to help merchants go digital and further their business, in turn bringing more revenue for the company. Not to mention Gopay digital wallets which enable easy transactions for both consumers and merchants alike.

We can see how one pillar of the GoTo ecosystem connects and supports the other pillars within. By cross-pollinating their products, we believe that it will increase the future long term take rate projection of the company.

Who Is Going To Be The King In The Red Ocean?

The path for GoTo will not be easy since they have a lot of competition within their landscape namely Grab and SEA Group. They are all secured for competition with each of them having different amounts of war chests. GoTo is expected to be valued at around USD 30bn, Grab was valued at USD 40bn at their IPO (while now it is only USD 12.5bn), and SEA Group is the largest among all with their extensive portfolio of companies making their valuation around USD 87bn. SEA Group is currently competing with Tokopedia while Grab serves as the opponent to Gojek. 

To get a broad view of the landscape, SEA Group is fighting multiple fronts with their war chest in multiple countries while Grab is mostly operating in Southeast Asia, with Indonesia being one of the most prioritized markets due to their large population. GoTo needs to be able to defend and strategically dominate both the E-Commerce and on-demand service, at least in the Indonesian market using their upcoming IPO funds. 

It remains to be seen how the market would react to the GoTo IPO. However, what is clear is that Bukalapak and Goto has a different nature and it will be interesting to see if their valuation and influence will be appreciated by the market.