Via Financial Times

Tokopedia, Indonesia’s largest ecommerce marketplace, is in the final stages of preparing a fundraising of up to $1.5bn from investors including Temasek, Alibaba and SoftBank that would cement its position as the country’s second-biggest unicorn.

The fundraising, which could come as soon as next quarter, would value Tokopedia at between $8bn and $9bn, according to several people familiar with the matter.

That is up from a valuation of $7bn in 2018 and brings it closer in value to ride-hailing group Gojek, which is valued at about £10bn. People familiar with the deal, however, cautioned that the size of the fundraising and valuation could change.

Singaporean wealth fund Temasek is expected to lead the round with a $500m investment, with existing Tokopedia investors Japan’s SoftBank and China’s Alibaba joining in to avoid any dilution to their existing stakes. The fundraising was likely to be the last before a possible stock market listing, the people added.

The additional capital would give Tokopedia fresh ammunition in its fight to dominate the ecommerce market in south-east Asia’s biggest economy.

“We use capital and fundraising to find the right partners and accelerate our business strategy,” said Patrick Cao, Tokopedia’s president.

SoftBank’s involvement would come at a time when the valuation of many of its portfolio companies is under pressure. The Japanese group has faced criticism following large falls in the value of high-profile investments including property leasing business WeWork and ride-hailing company Uber. 

Temasek and other arms of Singapore Inc have been active in Jakarta’s growing start-up industry, backing young technology companies and the venture capital firms that invest in them. Temasek is a major investor in Gojek.

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Tokopedia is the market leader in Indonesia ahead of rivals Shopee, Lazada — in which Alibaba has a controlling stake — and Bukalapak. It has benefited from a combination of its status as a first mover, its local roots alongside a relentless focus on its core business.

The company’s planned fundraising could trigger a new capital arms race in Indonesian ecommerce comparable to last year’s war among ride-sharing companies. Some investors are anticipating consolidation in Indonesia’s ecommerce sector in the coming months in the face of the potential entry of Amazon.

“All the players are talking to each other all the time,” says one executive with first-hand knowledge of the market.

Investors have also pointed to Tokopedia’s business model of connecting buyers with sellers, which is less capital-intensive than that of other ecommerce companies because it does not require extensive logistics facilities. That has taken on added importance as investors focus on start-ups’ profitability.

Tokopedia has benefited from first-mover advantage in Indonesia, which has helped it to secure the biggest slice of the country’s ecommerce market, ahead of rivals Lazada, Bukalapak and Shopee, as well as a focus on its core business.

Indonesia is also luring more Chinese investors who are seeking to diversify their holdings away from their home country, but are put off by high valuations for start-ups in markets such as India. 

“Many mainland [Chinese] investors have been burnt by high valuations in India. They look at [Indonesia and south-east Asia’s] higher income per capita and other metrics, and are doubling down,” said Ying Lan Tan, founder of Insignia Ventures Partners, who invests in south-east Asia for wealthy Chinese entrepreneurs.

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His fund manages money on behalf of mainland Chinese technology entrepreneurs and high-profile Singaporean investors. It invests almost exclusively in south-east Asia. “Indonesia is just at the inflection point where China was when Alibaba’s Taobao took off,” he added.

Tokopedia, Temasek, Alibaba and SoftBank all declined to comment on the potential fundraising.