GoTo Group, the Indonesian e-commerce juggernaut that faced a choppy IPO market to debut on the Indonesian stock exchange earlier this year, says it plans to wait and see before launching a second IPO foreigner
“Given where the markets are and the volatility, I think we’re waiting for more stable and supportive markets before we consider doing this secondary listing outside of the [Indonesia Stock Exchange],” said Patrick Cao, Group President of GoTo, during the Spark Founders Summit hosted by Huawei Technologies in Bangkok, Thailand on Tuesday.
GoTo debuted on the Jakarta Stock Exchange on April 11, in an IPO that raised $1.1 billion. Shares rose more than 13% on the opening day, giving the company a market capitalization equivalent to about $30 billion. The company gave away thousands of shares to its 600,000 drivers before its commercial debut. In its prospectus, the Indonesian startup said it would also launch a secondary listing on a foreign stock market by the end of 2023, citing options such as the New York Stock Exchange, NASDAQ and the Hong Kong Stock Exchange, among others.
GoTo shares have struggled since its debut, falling about 30.3% since April. However, the company is managing the technology route better than its two main Southeast Asian rivals.
Shares of Singapore-based ride-hailing company Grab, which raised $4.5 billion in its December NASDAQ debut, valuing the company at $37 billion, have fallen 62.6% since early 2022. Shares in SEA, a Singapore-based digital entertainment company that has expanded into e-commerce and digital payments and operations on the New York Stock Exchange, have fallen 75.4% over the same period SEA remains the most valuable company in Southeast Asia with a current market capitalization of about $25 billion, compared to about $20 billion for GoTo and $10 billion for Grab.
GoTo is the product of the May 2021 merger of public transport company GoJek and e-commerce platform Tokopedia. Cao, who was president of Tokopedia before the merger, became president of the newly formed GoTo, while Andre Soelistyo, founder of GoJek, became CEO.
“The economy is singing”
Cao pointed to Indonesia’s strengths as a market for GoTo’s resilience amid global economic uncertainty. “Not only are commodity prices doing well, but the government’s decision to go lower to support more high-tech areas like batteries has really created a lot of value,” Cao said.
Indonesia has the world’s largest reserves of nickel, a critical metal for electric vehicle batteries. Indonesian President Joko Widodo banned exports of unprocessed nickel to encourage investment in domestic nickel processing and electric vehicle manufacturing. Widodo even detoured during an official visit to the US to press Elon Musk in person for Tesla to invest more in Indonesia.
Cao said the government’s efforts have “created a good virtuous circle within Indonesia itself, in terms of GDP growth and consumption growth.” In September, the Asian Development Bank raised its GDP growth forecast for Indonesia for 2022 from 5.0% to 5.4%. The bank expects GDP growth of 4.3% for the year in Asia.
The GoTo chairman also pointed to the strength of Indonesia’s stock market: the Jakarta Composite Index is up 7.8% for the year, making it one of the few in Asia, if not the world.—stock markets in positive territory in 2022.
Indonesia, with 274 million inhabitants, represents almost half of the population of Southeast Asia and generates almost 60% of the GDP of the region. GoTo counts Indonesia for more than 95% of its revenue.
And Cao argued that the Indonesian economy has plenty of room for further growth. He noted that while Indonesia’s economy used to be centered on the main island of Java, home to the country’s capital, Jakarta, growth is now spreading across Indonesia’s many islands. “The economy is boiling over” across the country, Cao said. “That means the entire nation is growing in a very healthy way.”
Cao said there are still gaps in the country’s economy that GoTo could fill, especially in financial services. He estimated that “about 48%” of Indonesia’s population is unbanked, while only 6% of Indonesian consumers have credit cards. “There’s a lot of work to be done,” Cao said.
More broadly, Cao argued that Southeast Asia has high smartphone usage but low penetration of e-commerce and digital finance, making it a good market for anyone looking to launch a startup
“There’s a lot of opportunity,” he said.
Sign up for the Features of Fortune email list so you don’t miss our top features, exclusive interviews and research.