Say Hello To The GoTo Group, The New Asian Super App Born From Gojek-Tokopedia Merger

The largest tech merger in Indonesian history is not only set to create Southeast Asia’s newest so-called “super app” but will also result in creation of a super cool company name: the GoTo Group.

This as Gojek finalizes its acquisition of Tokopedia in a deal aimed at creating a major new competitor in the field that also enjoys the backing of some of the industry’s biggest players including Alibaba, BlackRock, Facebook, Google, JD.com, PayPal and others in what is seen as the latest move to control the burgeoning market for so-called “super app” dominance in Southeast Asia.

The new firm will cover ride-hailing, food delivery, eCommerce and financial services under the new brand GoTo Financial, which encompasses GoPay and other merchant and financial services.

The merger, apart from being the largest in the nation’s history, is also the largest between two Asia-based internet platforms. Gojek’s Andre Soelistyo will head the newly combined entity as GoTo Group CEO, and also will continue to lead payments and financial services under the new brand of GoTo Financial. Tokopedia President Patrick Cao, meanwhile, will take on the role of GoTo Group president. Kevin Aluwi will continue as CEO of Gojek and William Tanuwijaya will remain CEO of Tokopedia.

The combined scale of the two entities will “increase financial inclusion in an emerging region with untapped growth potential,” Soelistyo said.

“Our goal has always been to build a company that creates social impact at scale, leveling the playing field for small businesses and giving consumers equal access to goods and services across the country,” Tanuwijaya said, noting that merger will advance the Indonesian economy and make the wider world of the digital market more available to all.

Going Up Against Grab

More available for all, and far more competitive for some, as the combined GoTo entity — which has been under development in talks that have stretched out for months — now has an estimated combined worth of roughly $40 billion, and now forms a super-app conglomerate of combined services ready to take on the market in general and local super app mega-player Grab in specific.

The Malaysia based super-app Grab grew from humble beginnings. Launching in 2012 as a ride-hailing app, it was initially written off as just another Uber knockoff launching in Southeast Asia. But Grab proved itself to have larger ambitions than that designation, and by 2018 Grab had successfully pushed Uber out of the market in Southeast Asia by outcompeting it and has since expanded its service offering wider — rides, food delivery, eCommerce and financial services all fall under Grab’s supper app umbrella of services. All easily accessible with tap from inside the Grab app.

And its stated ambitions are bigger. Grab’s goal, according to reporting, is to eventually build out a full virtual bank to serve its roughly 600 million consumers in Southeast Asia, most specifically the 290 million or so who remain unbanked.

“We want to be … the platform that enables financial institutions to serve this emerging consumer,” Reuben Lai, the head of Grab Financial Group, told the BBC.

The consumer group the company is most targeting at present are the tech-savvy millennials who currently comprise the majority of drivers on the platform, where the firm has a natural entry point with its digital wallet. Jixun Foo, a managing partner of GGV Capital and another early investor in the company told the BBC of his early advice to Grab to push into financial services.

“Once you have your [digital] wallet you start to use it,” he said. “Then it is natural that you use it to buy things, you want to access better credit [and] when you are travelling you may want to buy travel insurance along with it.”

And Grab’s unique focus on expansion into financial services and digital banking and the fact that its fleet of drivers worldwide is roughly twice the size of GoTo’s are two massive advantages it brings to the super app slugfest it is about to enter into with the new and improved Gojek (soon to be GoTo) in Southeast Asia. But Grab has also hit some tough sledding of late.

Riding The SPAC Wave

Earlier this year Grab leapt onto the public markets, eschewing the initial public offering (IPO) process in favor of a SPAC merger with Altimeter Growth Corp. worth about $40 billion.

“Southeast Asia is one of the fastest-growing digital economies in the world, with a population approximately twice the size of the United States. Yet online penetration for food delivery, on-demand mobility and electronic transactions are a fraction of the U.S. and China,” Grab said in a release at the time of the public listing.

But this week, Grab’s surfing some choppy waters as Altimeter, is just a few cents above its record low after bottoming at 28 percent since the Grab deal went through in April. The reason for the big drop? According to experts, skittishness from investors on the valuation for Grab and bigger overall concerns unrelated to Grab about the SPAC market in general of which Grab is caught in the crosshairs.

SPACs have seen a bit of a selloff, so it reflects the general sentiment, Angus Mackintosh, founder of CrossASEAN Research, told Bloomberg.

“The share price at current levels won’t make a big difference from Grab’s listing perspective, he said. “It just means profits your SPAC owners would realize are diluted to some extent. They have effectively locked in cornerstone investors at a $40 billion valuation. Whether Grab can sustain that lofty valuation after listing, given the competitive landscape, is a bigger question.”

Especially given that the competitive super app landscape is, as of this week, a more robustly crowded space now that GoTo is setting up to take the stage in Grab’s backyard, bringing its own super-app offering to bear. It’s not identical in terms of what it offers, particularly with the Tokopedia merger the firm is clearly leaning harder on eCommerce,  while Grab’s focus is more on digital finance. But there’s an awful lot of overlap between them, and it will be interesting to see how they divide up the consumer base as they seek to bring more people into their respective growing connected ecosystems.

A competition well worth watching, as who will be the winner, or if there will be a winner at all, unfolds over the rest of 2021.

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