With the wave of mergers and IPOs going on, Southeast Asia’s tech giants have even bigger capabilities.
Gojek has been a jewel in Indonesia’s booming technology sector for a while. The company’s blue-jacket drivers are present in cities across the archipelago and have recently expanded operations to neighboring countries such as Singapore and Vietnam. Going from wave to wave of venture capital investment from giants like Google, Tencent and Warburg Pincus, Gojek has gradually decoupled from core functions of ride-hailing and food delivery to other areas like bar electronic math.
The ultimate goal is to be a one-stop lifestyle app and digital wallet from which users can pay their bills and manage their finances while ordering food, booking vacation and shopping. online. Gojek went a long way closer to its final form earlier this month as it sought investor approval for a merger with e-commerce giant Tokopedia, a growing tech unicorn. in Indonesia. The agreement is reported value at $ 18 billion, and is expected to pave the way for dual listings in Jakarta and New York.
The news comes amid a series of financial moves by other Southeast Asian tech firms. Singapore-based Grab, Gojek’s biggest direct competitor, has announced plans to go public this month – something like that. According to the report from Resty Woro Yuniar and Kok Xinghui on the South China Morning Post, Grab will merge with a US-listed special purpose acquisition (SPAC) company: “SPACs are non-commercial companies. set up to raise money in an IPO. They are formed and listed with the sole purpose of acquiring an existing company in the future, then indirectly and quickly listed on an exchange ”. Grab will receive about $ 4.5 billion in cash from the deal. Traveloka, the leading online travel booking house in Indonesia, is said to be pursuing its own SPAC merger.
Arguably, this massive financial move is being fueled by regional rivals’ desire to catch up with Singapore’s Sea Limited, owner of e-commerce platform Shopee and game center Garena. Sea was listed on the New York Stock Exchange in 2017 and has saw its market cap soar since then, supported by an increase in demand caused by the pandemic Digital banking licensing by the Monetary Authority of Singapore.
Expectations for digital commerce in Southeast Asia are huge. The Temasek quoted by Google The study estimates the market will be worth $ 240 billion by 2025, $ 100 billion of which will come from Indonesia alone. As a result, the competition among tech companies is fierce as they rush into as many markets as possible, and that requires massive cash flow today. With the US stock market booming thanks to loosening monetary policy and massive fiscal stimulus, it is imperative to raise capital rapidly before this wave of liquidity drops again.
But a note of caution is warranted. Excessive financial innovation, especially when capital is easy to find, is not always desirable. The SPAC frenzy is a case in point, with Investor sentiment has cooled and the new SEC guidelines show that warrants in SPAC can actually count as liabilities instead of equity. Rushing into financial instruments is ignorant because you need short-term cash, historically ineffective. Hopefully Traveloka and Grab don’t find that difficult.
There is also the question of how much consolidation is too much. The merger of Gojek and Tokopedia will create a corporate octopus that will overwhelm the online consumer market more or less from start to finish. If they continue to achieve their goal of becoming a full-service banking and finance company that can rival the incumbent large banks, the question will need to be asked at some point as to whether a Is the company that controls most of the economy really desirable. In a slightly different context, Jack Ma recently asked this question answered bluntly as Chinese regulators crack down on Alibaba, it could be a move to curb Ma’s influence and power.
These tech companies are an incomparable boon to regional economies in my estimation, and the inflow of capital they make is certainly in the interest of policymakers. But as they evolve, merge, and transform into newer iterations at breakneck speeds, it’s important to keep in mind the bigger questions about merging are too much and remain somewhat skeptical. healthy when they finance growth by raising capital increasingly innovative (and potentially more risky) ways.