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The IUP Journal of Case Folio

GoTo - A Merger of Indonesian Digital Giants

Article Details

Pub. Date	: June' 2023
Product Name	: The IUP Journal of Case Folio
Product Type	: Article
Product Code	: IJCF030623
Author Name	: S Vij aya Lakshmi and Nagendra Kumar M V
Availability	: YES
Subject/Domain	: Management
Download Format	: PDF Format
No. of Pages	: 14

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Abstract

On May 17, 2021, PT Gojek Indonesia and PT Tokopedia, two Indonesian digital giants operating in the segment of online ride-hailing services and e-commerce business respectively, decided to merge. The merger was considered to be a landmark as it resulted in two digital services companies collaborating for the first time in the history of Indonesia. The combined entity, called GoTo, went in for an initial public of fering (IPO) in April 2022. The response to the IPO was positive, with a large number of retail and institutional investors showing interest. This was considered to be a positive sign for the company as the IPOs of its competitors, Sea Limited and Grab Holdings Inc, had received a lukewarm response. However, GoTo reported a net loss of $444 mn for the quarter ending March 31, 2022, and the stock price went down to IDR 302 from the listed price of IDR 338. GoTo needed to sustain the confidence of investors amidst growing inf lation and interest rates in the country, and growing competition. In this context, the case can be helpful in understanding the role of technology in the socioeconomic development of a country, the business model of super apps, marketing challenges faced by technology startups, the financial risks associated with investment in technology startups, and the scalability and expansion challenges of technology s t a r t u p s .

Today is a truly historic day as we mark the beginning of GoTo and the next phase of growth for Gojek, Tokopedia and GoTo Financial. Gojek drivers will deliver even more Tokopedia packages, merchant partners of all sizes will benefit from strengthened business solutions and we will use our combined scale to increase financial inclusion in an emerging region with untapped growth potential. For the consumer, GoTo Group will continue to reduce frictions and provide best in class delivery of goods and services. This is the next step of an exciting journey and I am humbled and proud to lead the GoTo movement.

- Andre Soelistyo, CEO of GoTo Group1

Introduction

According to resea rch co nd ucted by lea din g ma na gement con su lt an cy firm McKinsey & Company, Indonesia's2 digital economy was expected to be worth of $150 bn by the year 2025.3 The Association of Southeast Asian Nations (ASEAN) was expected to witness a huge growth, and Indonesia, ASEAN's largest economy, was expected to tu rn in to a co nsump tio n-based econ omy (Refer Exhibit I). To leverage on the forecasted situation, two Indonesian companies-ride hailing giant PT Gojek Indonesia (Gojek) and marketplace PT Tokopedia (Tokopedia)-merged on May 17, 2021, to form a new entity: GoTo.

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