Alibaba, SoftBank score first 2022 IPO windfall with GoTo sale

GoTo is the result of last year's merger between Indonesia's two most valuable Internet start-ups - Gojek and Tokopedia. PHOTO: GOTO

SINGAPORE (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 and SoftBank Group's Vision Fund.

The Jakarta-based company raised US$1.1 billion (S$1.5 billion) last week, meaning the value of the two investors' stakes will be almost US$5 billion combined following the share sale. It marks their first big windfall from an initial public offering (IPO) this year after their stocks were both battered in past months.

GoTo is the result of last year's merger between Indonesia's two most valuable Internet start-ups - ride-hailing company Gojek and e-commerce firm Tokopedia - to get more firepower against rivals in an increasingly cut-throat market.

For GoTo's top executives, the success of taking the company public is not translating into the type of riches recently associated with Asian IPOs.

Chief executive officer Andre Soelistyo will have a stake valued at US$235 million after the listing, while the holdings of Mr Kevin Aluwi and Mr William Tanuwijaya, who co-founded the start-ups that later merged to produce Indonesia's giant, will be worth US$213 million and US$494 million respectively, according to Bloomberg calculations based on the IPO prospectus.

It is not uncommon that early backers see a huge payday when a start-up goes public - that is the incentive for taking the risk to invest. What is 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 start-up, you need to burn cash to grow and to acquire users," said Mr Nathan Naidu, an analyst with Bloomberg Intelligence. "So I don't think the focus for the founders is on wealth. It is for getting the cash to grow the company."

While Mr Tanuwijaya, Mr Soelistyo and Mr Aluwi retain 26 per cent voting power after the share sale, their direct ownership in the Internet giant is tiny: Mr Tanuwijaya has a 1.77 per cent stake assuming over-allotment, Mr Soelistyo's is 0.84 per cent and Mr Aluwi's 0.77 per cent. Compare that with 8.71 per cent for SoftBank's Vision Fund and 8.84 per cent for Alibaba.

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 per cent stake after the listing. The firm is also giving away more than US$20 million worth of shares to long-serving drivers, part of a broader programme that includes merchants, consumers and its workers.

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