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Gojek-Tokopedia merger and IPO is a game-changer for ASEAN tech

  • Indonesia is one of the fastest-growing digital markets and could attract similar attention to China

  • The Gojek-Tokopedia merger will be a game-changer for the ASEAN tech space

  • Sea Ltd will no longer be the only game in town for investors looking for regional tech exposure

Gojek-Tokopedia merger and IPO is a game-changer for ASEAN tech
Nirgunan Tiruchelvam
Nirgunan Tiruchelvam

Head of Consumers Equity Research

Tellimer Research
11 January 2021
Published byTellimer Research

There are plans afoot for a massive merger in Indonesia that would raise the stakes for emerging markets e-commerce. Gojek (Indonesia's ride-hailing and payments giant) and PT Tokopedia (Indonesia's e-commerce provider) are looking to merge. There are plans for an IPO of the merged entity in Indonesia.

Gojek is valued at US$10.5 billion and Tokopedia is at US$7.5 billion, but the combined entity would create strong synergies. Essentially, the deal would be a merger of Indonesia's equivalents of Uber, PayPal, Amazon and DoorDash.

Grab vs Gojek vs Tokopedia

Indonesia is at the heart of the EM e-commerce boom, with Vietnam and Indonesia being the fastest-growing digital economies outside China.

Fastest growing digital economies outside China (US$)

There are three key takeaways from this potential merger, in our view:

  1. As we laid out in our ultimate guide to Indonesia fintech, Indonesia's ecosystem lags other emerging markets on diversity and profitability, but a combined Gojek-Tokopedia entity could be a game-changer for the ASEAN tech space. It will create a platform for a dominant player along the lines of Alibaba in China and Amazon in the US. 

  2. The move is a competitive threat for Sea Ltd. Sea is a gaming company that intends to become an e-commerce giant. However, at this stage in its development, the gaming business is subsidising the e-commerce platform. ShopeePay, Sea's payment platform, has one-tenth of the market share of the combined share of GoPay (Gojek’s payment arm)  and Ovo (Grab’s payment arm in Indonesia). This means that Sea’s foray into payments will face serious competitive pressure. The merged Gojek-Tokopedia entity would have better scale economics and a larger platform.

  3. Sea's share price performance hitherto has partly been a consequence of its status as the 'only game in town' for investors seeking regional tech exposure. Its shares rose 400% in 2020 but its extravagant valuation can be attributed to its scarcity value. Following the merger (assuming it takes place), Sea's shares will no longer be the only game in town for ASEAN e-commerce listings and they may suffer with the heightened competition.

E-commerce comparables