Who Gojek Merges With Will Sway Tech In SEA

Bloomberg announced today (January 5) that Gojek is in advanced merger discussions with Tokopedia, one of Indonesia’s largest e-commerce sites.

According to the report, the merger could end in the coming months. The merged entity plans to be listed in the United States and Indonesia.

The two multi-billion dollar companies have signed an agreement to conduct due diligence on their respective businesses, according to people familiar with the matter.

To put corporate values ​​into context, Gojek is currently valued at around US $ 10.5 billion, while Tokopedia is valued at around US $ 7.5 billion.

On the other hand, the last known valuation of Grab was around US $ 14 billion, therefore a combined Gojek-Tokopedia entity would potentially have a higher valuation than Grab.

Earlier last month, a discussion of the potential merger between Gojek and Grab reportedly made significant progress.

However, all talks came to a standstill after the two sides failed to agree on some issues relating to the control of the combined Grab-Gojek entity.

According to reports, Grab has asked for significant voting power in the merged company and believes they should own a larger percentage of the merged company because its finances are more “robust” compared to Gojek.

The battleground of Southeast Asia’s digital economy: Indonesia

For any business looking to dominate Southeast Asia, the Internet battleground in Indonesia is essential. Home to over 273 million people, Indonesia’s population represents 35% of the total population of Southeast Asia.

According to a research report from Google, Temasek Holdings, and Bain & Co, Southeast Asia’s internet economy could reach US $ 300 billion (roughly $ 415 billion) by 2025, three times its size current annual.

Of this growth, Indonesia is the biggest contributor to the Internet economy in the region.

Internet economy Southeast Asia
Growing Internet Economy in SEA / Image Credit: The Economic Times

With Grab and Gojek vying head-on for the biggest slice of Indonesia’s digital economy pie, there had long been merger talks between the two companies to create a merged Grab-Gojek entity.

This would lead to more optimized operations and improved margins, not to mention the potential savings in marketing and promotion costs.

However, with Tokopedia in the picture now, a Gojek-Tokopedia entity will pose a significant threat to Grab’s dominance in Indonesia.

In 2019, Tokopedia was Indonesia’s most visited e-commerce site, before being overtaken by Shopee in 2020.

Shopee, which is owned by another internet giant Sea, is also aggressively gobbling up the market share of the digital economy in Southeast Asia.

market share of the digital economy in Southeast Asia
Digital economy market share in SEA / Image credit: iPrice Indonesia

With access to hundreds of millions of potential Tokopedia users, Gojek would be in an even stronger position to present its service offerings to a wider audience base.

The Gojek-Tokopedia entity will also hold a dominant position in the country’s e-commerce, digital payment, carpooling, as well as the food delivery business.

As Gojek steps up talks with Tokopedia, the combined Gojek-Tokopedia entity could introduce a brand new Indonesian powerhouse that could undermine Grab’s ambition to be the region’s dominant superapp.

IPOs are easier and faster now

Earlier this month, it was reported that Tokopedia had received a merger offer from a Special Purpose Acquisition Company (SPAC) called Bridgetown.

Bridgetown is supported by Peter Thiel and Richard Li. Peter Thiel is the co-founder of PayPal and Palantir, while Richard Li is the son of Hong Kong magnate Li Kar Shing.

Compared to traditional Initial Public Offerings (IPOs), PSPC IPOs are the new preferred way for companies to list due to the relative ease and speed with which companies can go public.

As PSPCs are listed, private companies like Tokopedia and Gojek can transform into public companies by being “acquired” by these PSPCs, which are essentially empty companies listed to acquire private companies.

space funds collected
SPAC funds raised from 2003 to 2020 / Image credit: SPACData.com

Although Tokopedia has made no decision as to how it will be listed, it may choose to list through the Bridgetown SPAC, bringing Gojek into the fold so they can build on the current IPO hype. of technology.

This will allow Tokopedia-Gojek-listed SPAC to raise more funds in the capital market, thus increasing its war chest to compete head-on with Grab over the next several years.

With an offer ready to be listed through the Bridgetown SPAC, we could hear the Gojek-Tokopedia end-of-list news in the coming months.

The founders of the two companies have also been friends since their company was founded over ten years ago and expect an amicable alliance.

Gojek is now in a unique position to determine and significantly influence the technological power play in Southeast Asia over the next decade.

Whoever Gojek decides to merge with will determine the top and potentially the winner of the internet economy in Southeast Asia over the next 10 years.

Featured Image Credit: Reuters / PYMNTS / Dedy Pramu via Shutterstock

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Jothi Venkat

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