(Bloomberg) — GoTo Group, whose business spans ride-hailing, e-commerce and fintech, became one of the world’s biggest listings this year, giving a much needed boost to early backers including China’s Alibaba Group Holding Ltd. and SoftBank Group Corp.’s Vision Fund.
The Jakarta-based company raised $1.1 billion last week, meaning the value of the two investors’ stakes will be almost $5 billion combined following the share sale. That marks their first big windfall from an initial public offering this year after their stocks were both battered in past months.
For GoTo’s top executives, the success of taking the company public isn’t translating into the type of riches recently associated with Asian IPOs.
Chief Executive Officer Andre Soelistyo will have a stake valued at $235 million after the listing, while the holdings of Kevin Aluwi and William Tanuwijaya, who co-founded the startups that later merged to produce Indonesia’s giant, will be worth $213 million and $494 million, respectively, according to Bloomberg calculations based on the IPO prospectus.
It’s not uncommon that early backers see a huge payday when a startup goes public — that’s the incentive for taking the risk to invest. What’s notable in this case is how much the founders’ ownership got diluted in the various funding rounds that brought in billions of dollars.
“In the mind of a startup, you need to burn cash to grow and to acquire users,” said Nathan Naidu, an analyst with Bloomberg Intelligence. “So I don’t think the focus for the founders is on wealth. It’s for getting the cash to grow the company.”
While Tanuwijaya, Soelistyo and Aluwi retain 26% voting power after the share sale, their direct ownership in the internet giant is tiny: Tanuwijaya has a 1.77% stake assuming over-allotment, Soelistyo’s is 0.84% and Aluwi’s 0.77%. Compare that with 8.71% for SoftBank’s Vision Fund and 8.84% for Alibaba.
GoTo declined to comment on the value of stakes held by its executives.
But the fund that holds an even bigger proportion of the company is one that allocates stock options to employees in the coming years: The GoTo Peopleverse Fund will have a 9.03% stake after the listing. The firm is also giving away more than $20 million worth of shares to long-serving drivers, part of a broader program that includes merchants, consumers and its workers.
“It’s about the sense of ownership and the badge that they’re part of the big family of GoTo,” Soelistyo said in an interview, referring to the share program. “The best way to sum this up is through one of our internal values, which we call ‘it’s not about you.’ It’s about us. It’s about the communities that we support that have made our success happen.”
GoTo is the result of last year’s merger between Indonesia’s two most-valuable internet startups — ride-hailing company Gojek and e-commerce firm Tokopedia — to get more firepower against rivals in an increasingly cutthroat market. Over the years, the two amassed a long list of investors, including Google, Tencent Holdings Ltd. and Sequoia Capital India. The latter was an early backer of both Gojek and Tokopedia.
It all started in 2009, when Tanuwijaya, the son of a factory worker, made a bet on Indonesia’s economic and internet boom and founded Tokopedia — the name is a variant of the Indonesian word for “store.” A year later, Nadiem Makarim, a Harvard Business School grad and former McKinsey & Co. consultant, set up Gojek to arrange courier deliveries in Jakarta.
Soelistyo joined Gojek in 2015 after working as an investor at private-equity firm Northstar Group, which became the first institutional backer of the upstart. He and Aluwi were named co-CEOs of the ride-hailing company in October 2019, when Makarim left to join the government as the nation’s minister for education and culture.
The IPO is going ahead despite a rout in tech stocks, though it got downsized from its original goal. An index tracking the shares globally has slumped more than 10% this year with rising interest rates and geopolitical tensions weighing on the sector. GoTo’s regional peers have been particularly hit.
Singapore-based Grab Holdings Ltd., which also operates in Indonesia, has lost two-thirds of its market value since it merged with a blank-check firm in early December. Last month, it reported a wider loss after increasing its spending for incentives to lure drivers and customers — highlighting risks in the highly competitive space.
Sea Ltd., which at one point minted Singapore’s richest billionaire, has tumbled about 65% from its high in October. The gaming and e-commerce giant forecast its first decline ever in bookings at its digital gaming unit, while political headwinds in India pushed it to shut its main e-commerce operation just months after launching. New Delhi had already banned its most popular mobile game, Free Fire, citing security concerns because of its Chinese links.
While GoTo remains unprofitable — it reported annual deficits for the three years through 2020 and a loss of 8.2 trillion rupiah ($570 million) in the first seven months of 2021 — Soelistyo is optimistic. After all, Indonesia is Southeast Asia’s biggest economy, and the company also has operations in Vietnam and Singapore.
“Our listing will be a great moment for those involved in the success of our ecosystem and for everyone that believes in the ‘Indonesian dream’,” Soelistyo said in the statement announcing the initial share sale. “We hope that our IPO will show the world the tremendous opportunity that exists in our country and throughout the Southeast Asia region.”
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