Google, Temasek investing in Go-Jek in $1.6b funding round

A Go-Jek rider ferries a passenger through a busy street in central Jakarta. The ride-hailing start-up is facing competition from Grab and Uber, which are expanding in Go-Jek's home market, giving rise to the need for backing from deep-pocketed inves
A Go-Jek rider ferries a passenger through a busy street in central Jakarta. The ride-hailing start-up is facing competition from Grab and Uber, which are expanding in Go-Jek's home market, giving rise to the need for backing from deep-pocketed investors.PHOTO: REUTERS

Alphabet's Google, Singapore investment company Temasek Holdings and Chinese online platform Meituan-Dianping are investing in Indonesian ride-hailing start-up Go-Jek as part of a US$1.2 billion (S$1.6 billion) fund-raising round, sources familiar with the matter said.

The investments by Google - its first in a ride-hailing firm in Asia - and the other prominent investors underscore both the potential of the business in South-east Asia, a region of 640 million people, as well as the competitive threat in the ride-hailing environment.

As Go-Jek's rivals Grab and Uber Technologies have expanded their presence in the region, the need for backing from deep-pocketed investors has risen. Ride-hailing companies have been spending heavily to attract both riders and drivers with discounts and promotions that have hurt their profit margins.

"As a strategic investor, Google can add a lot to Go-Jek's business," said one source.

Grab and Uber are backed by Japan's SoftBank Group, while Go-Jek has secured investments from Chinese technology giants Tencent Holdings and JD.com.

In the latest funding round, Go-Jek's existing investors, such as global private equity firms KKR & Co and Warburg Pincus are also participating, the sources said. The funding round opened last year and is expected to close in a few weeks, they said.

It was not immediately clear how much the investors are pumping in individually. Breakingviews said, citing sources, the new money from investors values Go-Jek group at roughly US$4 billion, compared to more than US$6 billion for Grab.

Go-Jek, which began as a ride-hailing app for motorcycle taxis, operates mainly in Indonesia but is developing a food delivery business. Its mobile payment business, Go-Pay, is also growing rapidly.

Google, KKR, Meituan-Dianping, Temasek and Warburg declined to comment. Go-Jek did not respond to requests for comment. The people declined to be identified as they were not authorised to speak to the media.

Both Grab and Uber are expanding in Go-Jek's home market, which is South-east Asia's most populous country and where locals are keen to lap up an array of mobile-based services. South-east Asia is the world's third-biggest ride-hailing market after China and the United States.

Go-Jek, which began as a ride-hailing app for motorcycle taxis, operates mainly in Indonesia but is developing a food delivery business. Its mobile payment business, Go-Pay, is also growing rapidly.

Reuters reported last year that JD.com was investing about US$100 million in Go-Jek. This followed an investment by Tencent, which is also an investor in JD.com.

Last week, Hyundai Motor said it had invested in Grab.

REUTERS

A version of this article appeared in the print edition of The Straits Times on January 19, 2018, with the headline 'Google, Temasek investing in Go-Jek in $1.6b funding round'. Print Edition | Subscribe