A Gojek driver rides a motorcycle along the road in Jakarta, Indonesia, January 5 2021. Picture: DIMAS ARDIAN/BLOOMBERG
A Gojek driver rides a motorcycle along the road in Jakarta, Indonesia, January 5 2021. Picture: DIMAS ARDIAN/BLOOMBERG

Singapore  — Indonesian ride-hailing and payments firm Gojek and e-commerce leader Tokopedia are in advanced talks to seal a $18bn merger ahead of a potential dual listing in Jakarta and the US, people with knowledge of the matter said on Tuesday.

A deal, which would be the biggest for Indonesia, could transform the landscape in the country's e-commerce market, whose growth has accelerated as stay-at-home pandemic restrictions have stoked demand for food delivery and e-payments.

Bigger rivals include Southeast Asian ride-hailing, food delivery and e-payments firm Grab, and Singapore-based regional internet company Sea, which has a market value of $100bn  and operates e-commerce platform Shopee.

As a merged company, decade-old start-ups Gojek and Tokopedia would seek to expand market share and pursue profitability by offering services, such as grocery shopping and courier services from a single platform.

“An international listing for a regional internet group will showcase that Southeast Asia isn't a one-hit wonder. It'll pave the way for global growth and exits for several other high-growth start-ups from the region,” said Varun Mittal, head of emerging markets fintech business at E&Y.

Common investors in the pair, which are Indonesia's most valuable start-ups, include Temasek, Sequoia Capital and Google.

Alibaba and SoftBank are among Tokopedia's investors, while Gojek's include Warburg Pincus and Tencent.

Three of the people with direct knowledge of the matter said Gojek and Tokopedia in late December agreed to conduct due diligence of each other's business.

The founders and some senior executives of Gojek and Tokopedia have been friends for the past decade and aim to finalise a deal in the first half, the people said.

Talks between the companies started in 2018, two people said. Negotiations gathered momentum in November 2020 after months of merger talks between Gojek and Grab faltered, they said.

To finalise a deal, Gojek and Tokopedia need to thrash out merger ratios and seek approval from their boards.

The people said Gojek was last valued at just more than $10bn and Tokopedia at about $7bn. The combined entity would figure in the top 10 Indonesian companies by market value and become one of the largest Southeast Asian tech companies.

All the sources declined to be identified as the talks were private. Gojek, Tokopedia and Grab declined to comment.

A listing of the combined businesses could raise as much as $2bn, two people said, in what could be one of the biggest IPOs by an Indonesian company.

Reuters reported in December that Tokopedia received a merger approach from a blank-cheque acquisition firm. Tokopedia had said an indirect listing via a special purpose acquisition company was an option.

Gojek and Grab are both seeking to become one-stop shops for ride-hailing, food delivery and payments. Tokopedia is a marketplace which, unlike most of its rivals, does not hold its own inventory. Southeast Asia, with a population of about 650-million, expects to see its internet economy grow to $300bn from about $100bn in 2020.

“In order to truly compete against Sea, Gojek and Tokopedia would have to demonstrate that they are more than an Indonesian business,” said Joel Shen, a technology lawyer at Withers.

“On the other hand, Gojek and Tokopedia are seen as home-grown tech champions. For this reason, a merger would appeal more strongly to the nationalistic sentiments of Indonesian investors and regulators alike.”

Gojek has expanded in countries including Singapore and Vietnam, while Tokopedia's Indonesian marketplace has more than 100-million monthly active users.

Bloomberg News earlier reported merger talks between Gojek and Tokopedia.


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