GoTo Pre-IPO: Strategies to Steer Enthusiasm

GoTo, the merger company of Gojek and Tokopedia, became the next name mentioned by the Indonesia Stock Exchange to take the floor after Bukalapak. It is planned that the corporate action can be realized in the fourth quarter of 2021. Latest news in circulation, prior to the corporate action being held, Goto conducting pre-IPO offers for institutions and VCs on a limited basis.

The targeted value is between $1 billion-$2 billion (around Rp15 trillion-Rp29 trillion) for initial public offerings in Indonesia and the United States. So, why the need for a pre-IPO?

Menurut Investopedia, pre-IPO is the offering of shares in large quantities before being listed on a public exchange. Buyers are usually private equity firms, hedge funds, and other institutions that are willing to buy shares in large quantities. Due to the magnitude of the investment and the risks involved, buyers of pre-IPO shares usually receive a discount from the price listed in the IPO.

Also mentioned, these purchases are usually made without a prospectus and without any guarantee that listing will occur. From the company's perspective, pre-IPO is a strategy to offset the risk during the IPO later if public enthusiasm is not as predicted. Therefore, it is this discounted price reward that compensates for this uncertainty.

The company, however, definitely doesn't want these pre-IPO buyers to immediately sell all the shares when the stock price soars as soon as it hits the stock exchange. To prevent this, the lockout period (lock-up period) are generally included in pre-IPO schemes.

Pre-IPO is a new thing for Indonesia. Reflecting on the experience of tech giant Alibaba, it previously took this step before going public on the NYSE as $BABA in September 2014.

In the grand celebration, Alibaba invited big-name investors and wealthy private individual. One of his names is Ozi Amanat, venture capitalist from Singapore. He bought Alibaba's pre-IPO shares for $35 million at a price of $60 per share.

On its first day publicly, BABA listed a price per share of $90. Then in November 2020, the price bounced to the level of $276.

Due to the risk of uncertainty, GoTo is determined to hold a pre-IPO. When referring to Investopedia again, the action aims to get fresh funds in a fast and large amount. Even if GoTo's IPO is a great success, all parties will benefit.

Moreover, in the past few years, in an opportunity, Tokopedia CEO William Tanuwijaya had mentioned his desire to conduct a pre-IPO.

Control enthusiasm until the end of the year

Although the label "company" tech-unicorn Bukalapak has taken the first floor on the exchange, they must prepare a counterattack strategy (counter attacks) which must exceed what Bukalapak offers. However, in terms of market capitalization, Goto leading the way at $18 billion which surpassed OPEN's $6,05 billion.

Not only GoTo, other technology companies planning an IPO, will definitely make success OPEN as a benchmark.

Bukalapak's news that is so busy, on the one hand, has created two camps of types of investors. Those who see the company's performance record and those who see the company's potential in the future. This condition is a further note, how GoTo can stem this.

All the learnings from BUKA certainly add to GoTo's treasures in setting strategies to maintain public enthusiasm. Plus, usually the end of the year the stock market is always colored with a bullish trend. Like rowing one or two islands, GoTo wants to make sure all parties are happy with all the scenarios created.