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Grab Or Tokopedia? Whoever Gojek Merges With Could Influence The Tech Power Play In SEA

gojek grab tokopedia

Bloomberg reported today (Jan 5) that Gojek is in advanced merger talk with Tokopedia, which is one of the largest e-commerce sites in Indonesia.

According to the report, the merger may conclude in the upcoming months. The combined entity plans to be listed in the United States and Indonesia.

The two multi-billion dollar company have signed an agreement to conduct due diligence of each other’s business, according to sources familiar to the matter.

To put the values of the companies in context, Gojek is currently valued at about US$10.5 billion, while Tokopedia is valued at around US$7.5 billion.

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

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

However, all discussions have came to an impasse after both parties failed to agree on certain issues pertaining to control over the combined Grab-Gojek entity.

According to reports, Grab requested for significant voting power in the merged company, and feels that they should own a bigger percentage of the merged company as its finances are more “robust” compared to Gojek.

The Battleground Of Southeast Asia’s Digital Economy: Indonesia

For any companies looking to dominate Southeast Asia, the Indonesia internet battleground is key. Home to over 273 million, the population of Indonesia makes up 35 per cent of the total population of Southeast Asia.

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

Out of this growth, Indonesia is the biggest contributor to the internet economy in the region.

internet economy southeast asia
Internet economy’s growth in SEA / Image Credit: The Economic Times

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

This would lead to more optimised operation and improved margins, not forgetting the potential savings in marketing and promotional costs.

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

In 2019, Tokopedia was the most visited e-commerce website in Indonesia, before being overtaken by Shopee in 2020.

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

digital economy market share southeast asia
Digital economy market share in SEA / Image Credit: iPrice Indonesia

With access to hundred millions of potential Tokopedia existing users, Gojek would be in an even stronger position to introduce their 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, ride hailing, as well as the food delivery business.

As Gojek ramps up discussions with Tokopedia, the combined Gojek-Tokopedia entity may introduce a whole new Indonesia powerhouse that may be detrimental to Grab’s ambition in being the region’s dominant superapp.

IPOs Are Easier And Faster Now

Earlier this month, there were reports that Tokopedia received a merger offer from a special purpose acquisition company (SPAC) called Bridgetown.

Bridgetown is backed 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 tycoon Li Kar Shing.

As compared to traditional initial public offerings (IPOs), SPAC IPOs are the new preferred way for companies to list due to the relative ease and speed at which the companies can go public.

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

spac funds raised
SPAC funds raised from 2003 to 2020 / Image Credit: SPACData.com

While Tokopedia has not made any decisions with regards to how it will be listing, it may choose to list via the Bridgetown SPAC, bringing Gojek in the fold so that they can bank in on the ongoing technology IPO hype now.

This will result in the Tokopedia-Gojek listed SPAC raising more funds from the capital market, increasing its war chest to compete head-on with Grab over the next few years.

With a ready offer to list via the Bridgetown SPAC, we may actually hear the listing completion news of Gojek-Tokopedia in the next few months.

Founders of the two companies have also been friends since their company inception more than a decade ago, and they expect an amicable alliance.

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

Whoever Gojek decides to merge with will determine the upper hand and potentially the winner of the Southeast Asia’s internet economy in the next 10 years.

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

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