Naver Disburses Investment of 2,18 Trillion Rupiah to EMTEK, Opens Opportunities for Digital Business Synergy

PT Elang Mahkota Teknologi Tbk. (EMTEK) announced that it has implemented Capital Increase Without Pre-emptive Rights (PMTHMETD) by issuing 4,75 billion new shares with a nominal value of Rp20 per share. At an exercise price of Rp1.954,- per share, the shares of the company's ownership were purchased by Naver Crop., H Hodings Inc., and several institutions from Indonesia such as Allianz Life, Ashmore Asset Management, Manulife Asset Management, Batavia Prosperindo, Elbara Perkasa, and Syailendra Capital.

The value that was successfully recorded from this corporate action was around Rp. 9,29 trillion. The release stated that the funds received by the company will be used for investment and working capital in the company and its subsidiaries.

More specifically, Naver as a technology giant from South Korea has invested in the media conglomerate worth $150 million or the equivalent of 2,18 trillion Rupiah. This was conveyed by the company to local media. It is interesting, because both companies have the same business slice, namely technology and digital media.

Naver said that for them this equity funding is intended to strengthen the company's operations in Southeast Asia. Together with EMTEK's strengths, he hopes to find new growth opportunities in the region, including Indonesia.

Currently, Naver and EMTEK are both holding shares in Bukalapak in Indonesia. Naver is starting to enter the ranks of investors e-commerce unicorns This was done through the Asia Growth Fund in early 2019, a managed fund that he initiated with Mirae Asset.

Through their subsidiary venture unit LINE Ventures, they have also invested heavily in digital startups in Southeast Asia. Some of its portfolio operating in Indonesia include Grab, Carousell, iPrice, Warung Pintar, IDN Media, Zuzu, HappyFresh, and Amartha.

In his statement, Naver's Head of Corporate Development & Investment Lee Jung-an said that this partnership will create synergies in various areas. With a grand vision of bringing Asian corporate business models to the global stage.

In terms of market capitalization, EMTEK is one of the 10 largest companies in Indonesia. Its main business unit is media on many channels, including television, OTT platform, and various news online. Apart from Bukalapak, they also have a sizable stake in the DANA payment platform proptech PropertyGuru, and Reservasi.com OTA services. EMTEK also supports East Ventures' managed fund, to focus on investing in early-stage startups in Indonesia.

Measuring the synergy that will be formed

In its home country Naver is the market leader for search engine platforms. Meanwhile, there are three businesses in Indonesia that are quite obvious, namely LINE Messenger, Webtoon, and V Live.

LINE has the most powerful user base among other units. However, you could say its prestige has started to fade in recent times along with the dominance of users of other services such as WhatsApp, Telegram, or Facebook Messenger. In the messaging application line, EMTEK itself also had a bad experience when it came to commanding the BBM platform – which in the end closed as of May 2019.

On the platform online media, both have quite good experience – especially now that EMTEK is leading the local VOD market through Vidio, at least in terms of application traction they often occupy top rating in the last few months. Naver has capabilities through the Webtoon and V Live platforms which could be complementary to existing services if integrated. It's also business related advertising which is one of the backbones of both companies.

In addition, as of 2019 yesterday, Naver also began to seriously work on fintech by establishing NAVER Financial. This business is in line with DANA, which is also continuously increasing its penetration as an alternative to digital payments and applications "great" for various financial needs.

Meanwhile, for digital trading, through Bukalapak, both of them really have to think about the right steps to keep the platform at the top of the competition standings. Shopee with the power that Sea Group has, plus plans to merge Tokopedia-Gojek deserves attention. Especially if you have ambitions [in the future] to bring a regional expansion business.

Judging from the business model it has, there are many slices that can be synergized between EMTEK and Naver. The birth of new services or applications from the synergy of the two companies will also improve the quality of the ecosystem digital media in Indonesia in the midst of business competition that continues to heat up.

So far, MNC Group has become EMTEK's competitor. In addition to operating the media business, the corporation led by tycoon Hary Tanoesoedibjo also has various other similar lines, including business fintech and E-commerce. Even their OTT platform is in the middle swing into the United States stock exchange through the recently discussed SPAC channel.