GoTo deal – a push for Southeast Asian technology IPO wave?

Good start of GoTo

As expected, the number 1 technology “unicorn” in the country of thousands of islands, GoTo, has raised more than 1.1 billion USD, reaching a market capitalization of nearly 30 billion USD after the IPO last week. According to data from Refinitiv, the above figures help GoTo become the 5th largest IPO globally since the beginning of the year. The company’s stock price also had an impressive debut on the Jakarta Stock Exchange, when at one point increased by 23% in the first session.

Even Indonesian President Joko Widodo congratulated GoTo on the successful deal through a video message: “I hope this IPO will contribute to motivating young people to put their enthusiasm into promoting the industry. Indonesian economy”.

GoTo is the combination of two leading Indonesian technology startups Gojek & Tokopedia (Source: Nikkei)

Founded last year by the merger of two of the country’s leading tech startups – ride-hailing platform Gojek and e-commerce firm Tokopedia, GoTo has partnerships with millions of small and medium-sized businesses across the country. Indonesia.

That is partly considered the reason why the company decided to conduct an IPO call in the country. As CEO Andre Soelistyo commented: “There is no perfect time for this deal. But we have decided to focus on the Indonesian market, looking for opportunities from domestic partners.”

GoTo highlights strengths from a diverse service ecosystem (Source: TechCrunch)

According to GoTo, its advantage comes from a “unique” service ecosystem, like the combination of Uber, DoorDash and Amazon in the US, and also comes with an array of electronic payments. While with other big tech startups in Southeast Asia, Grab is not active in e-commerce, while Sea’s Internet ecosystem has a very small presence with ride-hailing services.

GoTo’s strong launch is also a boost for giants who have poured money into this startup such as Softbank’s Vision Fund 1 or Alibaba, which is seeing many of its investments plummet from the wave of sell-offs. tech stocks late last year.

The wave of Southeast Asian IPOs is still cautious

Speaking before the IPO, CEO Soelistyo once expressed his expectation that “GoTo will pave the way for Indonesian startups to go public, and help our capital market expand in the future”.

The Indonesian stock market is waiting for more startups to conduct IPOs (Source: CNBC)

According to Reuters, a number of other technology startups from Indonesia are also planning to IPO after this deal, including Tiket.com, an online travel platform, or TokoCrypto – a unit specializing in blockchain and cryptocurrencies. has the backing from crypto giant Binance. “The GoTo IPO is a turning point for Indonesia,” said Joel Shen, an expert from global law firm Wither. “The country’s startups have been closely watching the deal, and a wave of IPOs followed. It’s entirely possible.”

However, GoTo is only considered the first test for investor psychology, after witnessing the leading technology names in Southeast Asia plummeting in price recently. At the end of last year, Gojek’s main rival in the Southeast Asian market, Grab, had a popular listing on Nasdaq (USA), with a market capitalization of nearly 40 billion USD. However, since then, the value of the company’s shares has dropped about 70%. Shares of Sea also saw a decline of more than 60% since the beginning of the year on the New York Stock Exchange.

Grab shares plunge 70% after listing on Nasdaq (Source: CNBC)

Choosing the Jakarta stock exchange and selling only to domestic investors, is also considered a “wind” step of GoTo, when Indonesia’s market went against the global trend this year, increasing by more than 5 % up to before the IPO took place. However, investors have not forgotten the “lesson” from Bukalapak, the first “unicorn” of Indonesia to go public. Despite being listed locally, the company has still seen its capitalization drop by nearly two-thirds since its IPO in August last year.

Unfavorable macro conditions, such as the fact that the US Federal Reserve (FED) accelerated the process of raising interest rates to target inflation, or the conflict in Ukraine, created a strong shock for the economy. financial markets, and make investors more wary of startups that are not yet profitable.

This is also true for GoTo itself, when it is facing stiff competition from Grab, Sea and many other technology firms in the “home turf” of Indonesia, the largest digital economy in the region. Grab even overtook Gojek in the food delivery segment, and the three-way race between these names has also begun to show up in some new areas such as online credit and finance. In its IPO filing, GoTo posted a net loss of more than $530 million in the first seven months of 2022 alone.

GoTo is facing stiff competition from rivals at home (Source: Nikkei)

Patrick Cao, president of GoTo, acknowledged that current conditions, including the stock situation of other Southeast Asian tech unicorns, have had an effect on the company’s valuation: “If it weren’t for the shocks, In the past, we were able to IPO at a higher price. But anyway we were lucky with our chance.”

In the longer term, companies like GoTo, Grab and Sea will all face closer scrutiny from shareholders regarding profitability. “These companies need to demonstrate that their core businesses will eventually be profitable, and new products such as digital financial services will need to be proven,” said Jianggan Li, CEO of technology investment fund Momentum Works. are services with a lot of potential – a very bumpy road. Investors, especially retail, may turn to small or mid-sized startups that are doing well.”

With GoTo, the company is still optimistic that the situation will be favorable in the coming time so that it can consider a plan to list parallel in the US. “We will monitor the market conditions going forward, and then determine when parallel listings are possible.”

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