Indonesian e-commerce firm Bukalapak aims to raise more than US$1 billion (S$1.35 billion) in its initial public offering (IPO), 25 per cent more than previously planned, on indications of strong investor demand for the country's first tech unicorn listing, said two sources familiar with the matter.

Bukalapak, which counts Singapore sovereign wealth fund GIC and Microsoft among its backers, is set to be the biggest local listing in 13 years and the largest ever by a start-up in the South-east Asian country.

The expanded IPO target size shows investors are keen to get their hands on relatively rare technology sector offerings in a region that boasts a growing consumer class.

It also underscores the companies' hunger for capital as they pursue rapid growth. Regional ride-hailing-to-payments firm Grab sealed a record US$40 billion merger with a United States special-purpose acquisition company for a US listing.

The books for Bukalapak's IPO will open this week for about 10 days, and will be followed by a listing next month, said the sources, who declined to be identified.

"We are constantly exploring opportunities for the company to continue to grow and develop financially. However, for now, we have not made any decisions," Ms Sufintri Rahayu, vice-president for corporate affairs at Bukalapak, said in an e-mail, when asked about the IPO.

Reuters reported last month that the IPO could raise between US$500 million and US$800 million, depending on investor demand and market conditions.

The sources said on Wednesday that the 11-year-old start-up is likely to be valued at more than US$5 billion, doubling its valuation from two years, and is set to sell a stake of about 20 per cent in the IPO.

They said investor demand is mainly from local and regional funds, with interest also coming from newer tech-focused investors in the US.

With a population of 270 million, South-east Asia's largest economy has one of the world's fastest-growing online shopping sectors and, like elsewhere, the sector has got a boost from stay-at-home consumers during the Covid-19 pandemic.

Bukalapak, which in Bahasa Indonesia means opening a kiosk in the market, trails leaders Tokopedia, Sea's Shopee and Alibaba's Lazada in Indonesia's US$40 billion e-commerce market measured by gross merchandise value.

Its listing comes ahead of the planned IPO of GoTo - the merged entity of Tokopedia and ride-hailing and payments firm Gojek.

Sources have said GoTo is looking to raise at least US$2 billion in a pre-IPO funding in the next few months, which will be followed by an Indonesian listing.

"If Bukalapak has a successful IPO, it would increase the confidence of other unicorns to list in Indonesia," said Mr Iqbal Darmawan, a Jakarta-based partner at HHP law firm.

Bukalapak and GoTo's planned debuts will boost Indonesia's lacklustre IPO market, which took a further hit during the pandemic, with the total value raised via IPOs falling by more than half last year to US$470 million, according to Refinitiv data.

So far this year, the number of listings has halved from the previous year, but the value raised has increased to US$603 million.

"Large funds and similar type of investors are attracted to tech IPOs as the deal sizes are huge," said Mr Darmawan.

Other investors in Bukalapak, which says it has more than 100 million users, include local media conglomerate Emtek and Standard Chartered's investment arm.

REUTERS