Shares in GoTo, whose business includes ride-hailing, delivery and financial services, tumbled 8.3 per cent after the announcement, as some investors took profit from the stock’s recent rally on expectations of a deal with TikTok.
“We need to see what kind of market disruption will happen after this partnership,” said analyst Maximilianus Nico Demus at Pilarmas Investindo Sekuritas.
Under the deal, TikTok will buy 75.01 per cent of GoTo’s Tokopedia, Indonesia’s biggest e-commerce platform, for US$840 million and inject TikTok Shop’s Indonesia business into the enlarged Tokopedia entity.
“The strategic partnership will commence with a pilot period carried out in close consultation with and supervision by the relevant regulators,” the two firms said in a Monday statement.
Many of Indonesia’s more than 270 million people are active social media users.
TikTok, owned by China’s ByteDance, has 124 million users in the Southeast Asian country and has been looking to translate that large user base into a major e-commerce revenue source.
The transaction will be concluded by the first quarter of 2024 and Tokopedia will receive a US$1 billion promissory note from TikTok that can be used to fund working capital needs, the companies said.
“TikTok has committed to invest over US$1.5 billion in the enlarged entity over time, to provide future funding required by the business, without additional dilution to GoTo,” they said.
Indonesia’s e-commerce industry is set to expand to about US$160 billion by 2030 from US$62 billion this year, showed a report by Google, Singapore state investor Temasek Holdings and consultancy Bain & Co.
(Alibaba owns the South China Morning Post.)
