Will Indonesian tech giant GoTo, backed by Richard Li, buck downtrend faced by Grab and Sea?

GoTo, which mainly serves the Indonesian market, raised US$1.1 billion with shares, making it Asia’s largest and the world’s fifth-largest IPO this year

But its fortunes can’t be determined by its first week. GoTo is still not profitable, while it has to overcome investors’ scepticism about its business model, analysts say

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Motorcyclists travel past a billboard advertising GoTo’s IPO in Jakarta. Photo: Bloomberg

Published: 9:00am, 14 Apr 2022

Indonesia’s biggest tech firm GoTo Group’s successful market debut earlier this week has lifted spirits in a flagging global IPO market, but analysts caution that the euphoria too could fade.

The company is backed by Hong Kong billionaire Richard Li Tzar-kai, Softbank Group’s Vision fund, Alibaba Group Holdings’ Taobao China, Google, Sequoia and Temasek Holdings, among others. Alibaba is the owner of the Post.

It was formed by a merger of two home-grown Indonesian firms – GoJek, which provided on-demand services from rides to payments and e-commerce leader Tokopedia.

Li, the son of Hong Kong’s richest man Li Ka-shing, has a US$900 million stake in GoTo Group. He invested in Tokopedia in 2017, one of his first major bets in Southeast Asia to grow his empire.

GoTo, which mainly focuses on serving the Indonesian market, raised US$1.1 billion with shares priced at 338 rupiah, making it Asia’s largest and the world’s fifth-largest IPO this year. Around 300,000 retail and institutional investors participated in the market debut, the highest number ever to take part in an IPO on the Indonesian Stock Exchange.

GoTo’s debut was stronger than those of its competitors, namely Singapore-based ride-hailing app Grab, which was listed on the Nasdaq in December after completing a merger through Altimeter Growth Corp, a special purpose acquisition company (SPAC). The shares of Grab fell sharply by over 20 per cent on its first day of trading – and its shares have now plunged by over 50 per cent since the start of the year.

Another competitor, NYSE-listed gaming and e-commerce giant Sea Ltd, also headquartered in Singapore, has also languished at the stock market, with its stock price more than halved since the start of the year. Both Grab and Sea, which focus on Southeast Asia, have lost around US$71 billion combined at the markets so far this year.