Shares in Indonesian super app GoTo are set to make their local stock market debut on Monday as doldrums in Southeast Asia’s tech sector have sapped investor demand.
The company was formed in May last year through the merger of ride-hailing and food delivery company Gojek and local e-commerce leader Tokopedia in the largest merger in Indonesia’s corporate history. It set an initial public offering price of IDR 338 per share, which translates into a projected market capitalization of about IDR 400 trillion (USD 27.8 billion).
The start of trading comes as Bukalapak has seen its share price slump since it listed last August, when it was the first to go public of Indonesia’s unicorns—private companies valued at more than USD 1 billion. The e-commerce platform’s stock traded about 59% below its IPO price as of the market close Friday on the Indonesia Stock Exchange.
Other Southeast Asian tech companies have also found the public markets tough going. Singapore-based rivals Grab and Sea Limited have seen their market values plummet.
Besides the concern over the significant loss of market value by Bukalapak and others, the listing also comes amid a global market downturn stemming from lingering concerns over the coronavirus pandemic and Russia’s invasion of Ukraine.
Analysts are focusing on whether GoTo can reverse the recent market trends, although the experience of Bukalapak weighs heavily.
“The entry of giant tech companies like GoTo would inject new optimism in our stock market” after Bukalapak’s experience, Alfred Nainggolan, head of research at Praus Capital Indonesia, told Nikkei Asia. The IDX Composite index has gained 6.9% so far this year.
But charting the same course as Bukalapak “would definitely be the worst case for GoTo,” said Nainggolan. The enthusiasm for GoTo’s IPO has not been as big as for Bukalapak’s, and that has been due to the latter’s share price trajectory, he added.
In addition to its ride-hailing and delivery services, GoTo provides mobile payments and technology services for merchants. As of last September, it had about 2.5 million registered drivers and 14 million registered merchants.
The company, seen as having strong growth potential due to Southeast Asia’s young population, has attracted global investors such as Google and Japan’s SoftBank Group. Both Gojek and Tokopedia planted deep roots in Indonesia, the world’s fourth most populous nation with more than 270 million people and the region’s biggest economy.
“Between e-commerce and digital financial services, GoTo can probably thrive in Indonesia, which has a booming digital economy,” Kapronasia, a fintech-focused consulting company, said in a report on March 28.
“The challenge for the company will be to reduce the cash burn of ride-hailing and food delivery. If Uber’s experience is anything to go by, GoTo could be in for a rough ride,” it added, referring to the difficulties the US ride-hailing and delivery service has experienced around the world, from license suspensions to regulatory and safety issues.