Inside GoTo’s High-Stakes IPO
After anticipation and delays, GoTo, the successful result of the merger of ride-hailing giant Gojek and e-commerce platform Tokopedia, is set to debut on the Indonesian Stock Exchange on April 7. Billions of dollars, not to mention national pride, hinge on GoTo’s success: it’s everything from a gauge of investor appetite to showcasing local Southeast Asian tech.
“GoTo is the face of Indonesia,” said Vendy Sutedjo, a former equity analyst at BNI Asset Management. Rest of the world. “This at for to be succeeded.”
The prime time to tap the public markets may be over, but there’s an urgent need to list as interest rate hikes loom. GoTo, which raised $1.3 billion in a pre-IPO funding round just five months ago, cut its target valuation by $40 billion to a still-aggressive $28.8 billion. But he’s struggling to convince investors, analysts and industry sources said Rest of the world. On March 21, the company announced it would extend its bookbuilding period by three days, a process that determines the stock price, and typically signals weaker-than-expected demand. GoTo said the goal was to give people on their platform – employees, merchants, consumers and driver-partners – more time to take action under a specialized program.
It’s not just GoTo and its investors’ future that hang on this IPO. Some believe a smooth listing could boost investment for local startups if it presents a good exit case study.
When the company closed its pre-IPO round in November, there was cautious optimism about Indonesia’s handling of Covid-19, until the Omicron variant emerged to dampen sentiment again. of the market. “It should have been last year,” said Christine Natasya, research analyst at Mirae Asset Sekuritas Indonesia. Rest of the worldreferring to the list.
Time is running out for the company to catch up with any remaining enthusiasm. “I believe they are rushing[ed] their listing,” said Harry Su, managing director of the Jakarta-based financial advisory group Samuel International. “Having it later could mean deterioration in investor sentiment due to higher interest rates.”
Worldwide, tech IPOs have vastly underperformed in recent months and markets fell in the first quarter of 2022 as nervousness mounted over Russia’s invasion of Ukraine. GoTo has also seen its losses increase during the pandemic. Investors are aware that the market capitalization of e-commerce platform Bukalapak has fallen by two-thirds since its IPO last year, and that Grab, the other regional tech giant, has seen an opening day. disastrous, plunging almost a quarter when opening the megaphone. on the Nasdaq in December. Last week, the parent company of payments unicorn Kredivo postponed its US SPAC (Special Purpose Acquisition Company) listing.
To keep pace with the US Federal Reserve raising interest rates, the company needs to go public quickly. A rate hike in the United States usually signals that investors are reducing their flows to emerging markets, which would dampen appetite for a listing in Jakarta. Indonesia’s central bank is also expected to follow, making it more attractive for local investors to keep their money in the bank, rather than investing it in the stock market. Finally, higher rates also mean higher funding costs, which could hurt loss-making tech companies like GoTo that rely on a steady stream of funding.
Samuel International has advised clients to reduce their investments in interest rate sensitive sectors, especially tech startups and unicorns. “It’s so unfortunate for GoTo to choose an inappropriate time to [an] IPO,” company strategist Lionel Priyadi said in a note to clients.
GoTo sees it differently. “Our success in achieving an IPO during this time would be a testament to the strength of our business, as well as demonstrating the strength of the Indonesian capital market,” said RA Koesoemohadiani, Secretary General of GoTo, in a message. at Rest of the world.
GoTo plans to use the fresh funds for working capital – 30% for the group, 30% for Tokopedia, 25% for GoPay and 5% each for its subsidiaries in Singapore and Vietnam, according to the prospectus. In the document, GoTo highlighted impressive numbers comprising its giant ecosystem – 2.5 million partner drivers in Indonesia, Singapore and Vietnam, around 14 million merchants and 55 million consumers. It processed nearly 2 billion orders and posted more than $28.8 billion in gross transaction value in the twelve months ending September 30, 2021.
Buried deeper in the prospectus were their losses, which were expected to reach $1.6 billion in 2021 and $2.2 billion by the end of this year. Grab, GoTo’s fiercest rival, posted a net loss of $3.6 billion in 2021, up 24% from a loss of $2.75 billion in 2020.
GoTo also plans a secondary offering by the end of 2023, targeting either the New York Stock Exchange, Nasdaq, Hong Kong Stock Exchange, Singapore Stock Exchange or London Stock Exchange, according to its prospectus. The Jakarta IPO could help the company’s prospects of being included in major stock indices, which would attract passive investors to the company who would buy indices rather than individual stocks, Su said. .