JAKARTA – Indonesia’s largest tech company GoTo is in talks with its major owners for a controlled sale of roughly US$1 billion (S$1.42 billion) of their stakes, aiming to avoid a potential stock crash when a lock-up on their holdings ends next month.
The ride-hailing and e-commerce provider is gauging the interest of early backers including Alibaba and SoftBank for a managed sale of some of their shares to new investors, according to people familiar with the matter. The plan is part of an effort to prevent a potential drop in GoTo’s stock price that could occur if many investors sell shares when a lock-up period expires on Nov 30, the sources said.
GoTo has also held discussions with some investors to get them to commit to holding their shares for a further period of as long as six months, said one of the people, who asked not to be identified because the matter is private. The Jakarta-based company is in the early stages of talks with the investors and the price levels for deals are subject to negotiations, the people said. Deliberations are ongoing and GoTo has not made any final decisions, they said.
The regional tech giant, which has a market value of about US$15 billion, is trying to avoid a situation where a large part of its backers would seek to cash out at the same time. Many major shareholders agreed to hold on to their stakes for at least eight months after the company’s initial public offering (IPO) in March.
In late June, Chinese artificial intelligence software maker SenseTime slumped as much as 51 per cent in Hong Kong trading after a lock-up of its shares expired, following last December’s IPO.
About one trillion GoTo shares, or more than 90 per cent of the total outstanding, become eligible to be sold starting on Nov 30. Still, that includes holders such as GoTo’s employee fund that are unlikely to sell. Alibaba holds about 8.8 per cent of GoTo, and SoftBank’s stake is about 8.7 per cent.
GoTo has engaged Citigroup and Goldman Sachs, along with local advisers, to help with managing the potential selldown by existing shareholders, the people said. Representatives of GoTo, Citigroup, Goldman Sachs and SoftBank declined to comment. Alibaba did not respond to a request for comment.
Formed via a merger of ride-hailing provider Gojek and e-commerce firm Tokopedia, GoTo raised US$1.1 billion in one of the world’s largest IPOs this year. The share sale boosted the value of the stakes of China’s Alibaba and SoftBank’s Vision Fund to almost US$5 billion combined.
After an initial surge following the debut, GoTo shares have pared gains to now trade about 40 per cent below the IPO price. Still, cashing out after the lock-up expires could provide many investors a much-needed boost this year amid a global decline in tech stocks.
GoTo is among South-east Asian consumer Internet companies that are adding users at a rapid clip but has yet to generate a profit. It is a leading Internet company in Indonesia, a country of more than 270 million people whose mobile-savvy consumers are shopping on Tokopedia’s platform and ordering rides and food via Gojek’s app. BLOOMBERG
