In the past 18 months, both startups were vying for new customers, especially in Indonesia, the world’s fourth-most populous country and the most profitable market for the two firms. Gojek, headquartered in Jakarta, is backed by Tencent and Google, among others. Grab, based in Singapore, counts SoftBank and Microsoft among its investors.
“The forces at play here are higher than simply what Grab or Gojek want — or indeed don’t want. This is about a number of long-term influential shareholders in both companies who want to either stem the losses or find a way to exit their investments,” said one Grab investor.
Talks between the two competitors have been ongoing for two years, but there is a “new urgency,” the sources said.
Part of the tension is due to SoftBank’s pressure to justify tech startups after the WeWork debacle last year.
Although SoftBank founder Masayoshi Son recently went to Jakarta for “exploratory discussions,” the sources said it’s “unclear” what kind of deal SoftBank is looking for.
“Today, given the dynamic, both sides are open,” a Gojek shareholder said. “There is a greater willingness at the highest levels, despite the delicate issue of control.”
Son said last year that “rescues” are now part of the past. The talks point to the changing environment in Asia, where profits were given a backseat to the growth of entrepreneurs and investors.
The two firms are worth far more than the combined $23 billion valuations they have today, according to reports. And any connections in Indonesia could lead to fines over antitrust issues.
Gojek and Grab started discussing a possible merger in February, which would create one of the world’s most highly valued startups. Gojek is valued at $9 billion and Grab valued at $14 billion.
A merger between Grab and Gojek could make $16.7 billion in annual revenue and would hit a valuation of $72 billion by 2025, Tech in Asia estimated, which could put it in a prime position for an initial public offering (IPO).