Over the years, developments in technology have made many processes much more straightforward. The pandemic made it essential to find ways to continue to work, shop and play from home. The implementation of social distancing shone a spotlight on how technology could assist companies to function safely without losing business.
With many Southeast Asian tech startups having to re-examine their business models due to the COVID-induced economic downturn, some have found solutions by either merging with other companies, adding unique features or pivoting completely. As eCommerce cements its position in the world, some firms are joining forces with door-to-door delivery or ride-hailing companies to offer super apps catering to all the consumers’ needs in one platform.
This joined-up thinking between sectors offering different services is behind the Gojek Tokopedia merger, which has resulted in its combined offering — GoTo.
More on the merger
Announced on May 17, 2021, the merger will see Gojek and Tokopedia, both already unicorns in their own right, joining forces to create a one-stop-shop service. Gojek is already considered a lifestyle super app’, and Tokopedia is one of the leading eCommerce platforms in the ASEAN region. Together they will create a holding company dubbed the GoTo Group in Indonesia’s largest-ever deal to date. The new entity will cover ride-hailing, food deliveries, online shopping and fintech solutions such as digital payments on one customer-centric platform.
Is Southeast Asia ready for the battle of the tech giants
Gojek currently has access to over 2 million registered drivers in its fleet of cars and motorbikes, while Tokopedia is one of Indonesia’s leading eCommerce companies. By combining their resources, the two companies can utilise their significant clout in the region’s biggest country to create a logistics and eCommerce business that other giant eCommerce companies, such as Amazon and Alibaba, might envy.
With plans to list the joint venture in Indonesia and the United States later this year, the merger’s $18 billion USD value will have investors eager to buy-in.
Grab’s partnership with Shopee
Recently, Gojek’s largest ride-hailing and food delivery rival, Grab, closed an almost $40 billion USD valued merger through a special purpose acquisition company (SPAC), Altimeter Growth Corp, and Singapore-based heavyweights Sea Ltd, owner of eCommerce platform Shopee. Grab has moved from merely ride-hailing and food delivery into offering financial services, and its recent tie-in with Shopee in The Philippines is likely to secure its status as the region’s most valuable startup.
Grab’s new partner, Sea, is already listed on the New York Stock Exchange with a valuation of $118.7 billion USD.
The foundation of GoTo and its operations
Andre Soelistyo of Gojek will lead the combined firm as the Group CEO, with Patrick Cao from Tokopedia serving as Group President. On top of his group responsibility, Soelistyo will lead the new GoTo financial sector, which will include GoPay and the group’s merchant and financial services offerings.
This foundation offers a competitive edge for this new entity to become Southeast Asia’s most prominent technology conglomerate.
GoTo’s most significant investors include SoftBank Group Corp, Alibaba Group Holdings, GIC, and Alphabet Inc’s Google and Tencent Holdings. The structure will see shareholders from Gojek and Tokopedia owning 58% and 42% of the holding company, respectively. The financial sector of the newly formed company will hold the 22% of Indonesian digital lender Bank Jago, purchased by Gojek in December 2020, increasing its share from the previous 4%.
What lies ahead?
According to Jianggan Li, the CEO of venture capitalists Momentum Works, GoTo will still have plenty of work to become the region’s dominant force. “GoTo will still need to face stiff competition from larger regional rivals Shopee and Grab, which are leading in market share in both eCommerce and food and which have their dominance in other parts of Southeast Asia to cushion the long-term investment commitment into Indonesia,” he recently told Reuters.
Growing a business at scale doesn’t happen overnight, but with such prestigious backers and a large consumer base, the new conglomerate is off to a great start.
The region’s bright future with Indonesia leading the way
While many Southeast Asian tech startups are booming in Indonesia despite the global health crisis, more mergers and partnerships are likely to form as companies look for ways to emerge from the slowdown brought on by the pandemic.
Investors are looking to the region for the next unicorns, and the Gojek Tokopedia merger will highlight the opportunities and possibilities available in this rapidly growing digital economy. The union of two such powerhouses is likely to positively impact the potential for other tech giants to emerge and may help lift the economy of Indonesia and its neighbours.
The two unicorns have helped put Southeast Asia firmly on the radar for VCs and investors by forming GoTo, and it is sure to have a beneficial knock-on effect for many smaller or early-stage startups in the region.