Gojek cleans up balance sheet ahead of possible M&A or public listing

Gojek Singapore Pte Ltd, the Singapore entity of Indonesian ride-hailing decacorn Gojek, recorded US$31.5 million in revenue for 2019 – a growth of 2.5x compared to the previous year.

But its loss before income tax stands at US$28.6 million, indicating a tenfold increase from 2018.

Photo credit: Tech in Asia Indonesia

A significant part of the loss involved Gojek’s investment in Bangladesh-based Pathao, a ride-hailing startup that had gone through some turbulent times in mid-2019. By the end of that year, Gojek Singapore had written off a US$17 million loan to Pathao as an impairment loss.

However, Rahat Ahmed, Pathao shareholder and founding partner of Bangladesh-focused venture capital fund Anchorless, says the impairment is mostly cosmetic.

Gojek had invested US$17 million in convertible notes in Pathao, and those notes still exist, he adds.

While technically a loan, the instrument is usually converted to equity after a certain period of time.

In this situation, because Gojek is mulling an IPO or merger, it has opted to clean up its balance sheet. “Thus, Gojek chose to ‘impair’ it – or write it down to zero so it didn’t look like an actual loan that was owed (because it isn’t),” he says.

Gojek and Pathao declined to comment for this story.

Bumpy road

2019 was a rough year for Pathao – often dubbed the “Bangladeshi version of Gojek” – as it went through a “massive” downsizing after prospective investors pulled out from a funding round, leading the company to consider strategies such as ecommerce.

In 2018, Gojek Singapore, which holds an 18.67% stake in Pathao through subsidiary Ojek Motor Bangladesh, provided a US$13 million loan to the Dhaka-headquartered startup. That was topped up further in 2019, but by the end of the year, the total loan amount was written off as an impairment loss.

As a shareholder, Gojek Singapore had also expensed its share of Pathao’s loss in 2018.

The financial statements also state that in May 2019, Gojek had “fully impaired” its investment in Ojek Motor Bangladesh. Based on that, a regional venture capitalist who declined to be named says it’s possible that the investment has been completely written off.