1. Startups

GoTo Targets 15,2 Trillion Rupiah from IPO, Used to Strengthen "Hyperlocal" Ecosystem

Parent company Gojek and Tokopedia started an initial public offering alias IPO by releasing 48-52 billion shares

PT GoTo Gojek Tokopedia Tbk (GoTo) officially announced its initial public offering or Initial Public Offering (IPO) on the Indonesia Stock Exchange (IDX). Delivered in his public exposure, main Gojek and Tokopedia is targeting fresh funds of $1,1 billion or the equivalent of 15,2 trillion Rupiah.

GoTo will sell 48 billion shares with a maximum of 52 billion Series A shares, equivalent to 4,35% of the issued and paid-up capital. The price set is in the price range of Rp316-Rp346 per share.

Co-founder and CEO Andre Soelistyo at PT GoTo's public expose Gojek Tokopedia Tbk

With this price fixing, his party estimates it can reach a market capitalization of between IDR 376,6 trillion-IDR 413,7 trillion, and has the potential to become one of the largest value IPOs in Indonesia. In addition, this pricing is considered to reflect GoTo's business strength, fundamentals, and prospects in the future.

The initial offering period is open from March 15-21 2022 and the public offering period is March 29-31 2022. Meanwhile, the listing date is effective on March 25, 2022. Meanwhile, GoTo appointed the underwriters for the issuance of securities, including PT Indo Premier Sekuritas, PT Mandiri Sekuritas, and PT Trimegah Sekuritas Indonesia Tbk.

ride-hailing, e-commerce, and fintech

In his public presentation, the Co-founder and GoTo CEO Andre Soelistyo mention will using GoTo's IPO funds to build infrastructure and resources the right way to execute the strategy hyperlocal through its three subsidiaries, viz Gojek (ride-hailing), Tokopedia (e-commerce), and GoTo Financial (fintech). With this strategy, GoTo seeks to accelerate the growth of new users, user engagement, and penetration of newly launched products.

Based on company data, currently Gojek have 2,5 million driver partners; Tokopedia has 12 million merchant with nearly 600 million SKUs for physical products, 4000 digital products, and more than 100 million Monthly Active Users (MAU); and GoTo Financial has a license in e-wallet, P2P, finance, banking (Champion), e-money, to payment gateway.

GoTo digital ecosystem / Source: IndoPremier

"With a large ecosystem, it enables GoTo to executing strategy hyperlocal. Efforts to meet the needs of goods and services at an economical cost can be achieved because: supply and demand close to each other. This is one of GoTo's strengths by optimizing its network of driver partners, merchants, and logistics. This becomes more strategy sustainable rather than depending on one use case only," he said.

Citing reports RedSeer as of December 2021, market on-demand is estimated to reach Rp. IDR 77,8 trillion in 2020 and is estimated to increase to IDR 259,2 trillion in 2025.

Euromonitor data in 2020 also notes that the giant GoTo ecosystem is able to contribute more than 2% to Indonesia's GDP and serves almost two thirds of household consumption in Indonesia.

Towards profitability

Based on the initial IPO prospectus, GoTo's total assets were recorded at Rp. 158,17 trillion as of the end of September 2021. Still in that period, its revenue was recorded at Rp. 3,40 trillion, up from the previous year which was around Rp. 2,34 trillion. However, GoTo still posted a net loss of IDR 11,58 trillion, up from the same period last year of IDR 10,43 trillion.

For a period of 12 months (October 2020-September 2021), GoTo's Gross Transaction Value/GTV reached Rp414,2 trillion. A total of 55 million users made transactions with order values ​​reaching 2 billion in that period.

GoTo's financial performance / Source: IndoPremier

Asked about the target of achieving profit, Tokopedia Co-founder William Tanuwijaya said, "desire to be profitable not just wishful thinking. Clearly visible in our prospectus, there are improvement [performance] in each quarter. We show our operational track record and believe we can do it profit in the medium term," he said.

Meanwhile, Andre revealed that he had mapped out his strategy by highlighting several main keys, namely acceleration of post-merger services with Tokopedia, user acquisition costs, and the impact on margins.

He assesses the synergy in the ecosystem Gojek and Tokopedia can help boost the growth in the number of users and transactions. According to him, this has been seen from the increase spending users after merging two business entities into GoTo. 

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"In one activity marketing, we can simultaneously increase transactions from our service. For example, transactions on Tokopedia use GoSend with GoPay payments. In one time spending, there are three to four services that are used," he explained at the GoTo IPO press conference.

Then, Andre also highlighted the commission factor (take rate) on the GoTo platform which is rated lower than similar platforms in the world. With this synergy, the opportunity to improve take rate can be faster if it is accompanied by the development of innovation, increased penetration of users and services, to marketing activities. In this way, gross income will also increase.

Meanwhile, in terms of user acquisition costs, implementation machine learning and data can help GoTo to understand user behavior. From here, it can create more campaigns and products customized to the user. This will also lower the cost of acquisition because the market becomes more targeted.

"With all of the above factors, it can have an impact on expansion margin and cost efficiency in fixed cost. Revenue growth is faster than outgoing expenses. This can help us achieve profit, " he concluded.

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