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MERGER - SINGAPORE. Indonesian ride-hailing and payments firm Gojek and e-commerce leader Tokopedia are merging to create a multi-billion dollar tech company called GoTo in the country's largest-ever deal, as rivals bulk up in the fast-expanding sector.
The combined entity, which will span online shopping, courier services, ride-hailing, food delivery and other services in Southeast Asia's largest economy, will be the biggest privately held technology firm in the region. It plans to list in Indonesia and the United States later this year, company executives said on Monday.
Two sources familiar with the matter told Reuters that GoTo was seeking a pre-IPO funding that could enable it to raise about $2 billion followed by public market floats with a potential valuation of roughly $40 billion for the group.
In a joint statement, the companies said their combined past valuation was $18 billion based on fundraisings done in 2019 and early 2020, and declined comment on future valuations.
Read Also: Indonesia's Gojek, Tokopedia merge to create tech giant
The merger of Gojek and Tokopedia - each backed by global heavyweight investors – comes amid a surge of competition in the ride-hailing and food delivery markets in Southeast Asia. Stay-at-home pandemic restrictions have stoked demand for food delivery, e-commerce and e-payments.
Last month, Southeast Asia's largest ridehailing and food delivery firm Grab clinched a $40 billion merger with a special purpose acquisition company and Singapore-based regional internet firm Sea Ltd, which runs e-commerce platform Shopee, is also muscling into food delivery and financial services
"GoTo will still need to face stiff competition from larger regional rivals Shopee and Grab, which are leading in market share in both e-commerce and food and which have their dominance in other parts of Southeast Asia to cushion the long term investment commitment into Indonesia," said Jianggan Li, CEO of venture outfit Momentum Works.
GoTo's biggest investors include Alibaba Group Holding , SoftBank Group Corp, Singapore sovereign wealth fund GIC, Alphabet's Google and Tencent Holdings.
Sources said Gojek's shareholders will own 58% of the holding company with the balance held by Tokopedia's investors.
