GoTo sets the tone for IPOs as debut pushes valuation past US$30 billion

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I’ll be the first to hold my hands up and confess: I did not expect GoTo Group’s (GOTO, IDX) public listing last week to be quite as successful. Current market conditions for IPOs appear to be tough, affected by macro factors including rising inflation levels, looming interest rate hikes, supply chain bottlenecks, and the Russia-Ukraine war.

Given these challenges, swathes of high-profile startups are putting their public market debuts on hold. India-based Oyo, Delihivery, and PharmEasy have either delayed their IPOs or are readjusting their valuations, while FinAccel, the parent firm of Indonesia’s Kredivo, has dropped its listing plans altogether.

No one can really blame them for taking the cautious route. One would only have to do a quick scan of the stock performances of Grab (GRAB, NDAQ), One 97 Communications (PAYTM, NSE), and Zomato (ZOMATO, NSE) to understand why startups want to remain private under the current circumstances.

While there were plenty of reasons to avoid an IPO, GoTo only needed one to pursue it: refilling its cash coffers. Although its original plan to list in 2021 was pushed back due to regulatory hurdles, the company will be glad to have seen this one through.

GoTo’s shares rose by as much as 23% on opening day and ended the week around 10% above its IPO price, giving it a valuation of over US$30 billion. For context, rival Grab’s valuation has plunged to less than US$12 billion since its market debut in December 2021. Grab listed on the Nasdaq through a SPAC deal, which had valued the super app at roughly US$40 billion.

Image credit: Timmy Loen

In a bid to revive its dwindling share price, Grab is now competing with major Japanese banks for the Southeast Asian assets of Home Credit, a Netherlands-based consumer finance firm. My colleague Miguel breaks down why Grab is doubling down its focus on financial services to reverse its fortunes in this premium story.

The draw of the financial services sector becomes even more evident upon analyzing Bukalapak’s (BUKA, IDX) fourth quarter results. The Indonesian ecommerce giant’s revenue jumped 29% in the Q4 2021, following an acceleration in its Mitra Bukalapak business. Four years ago, the SME-focused unit brought in US$1 million in net revenue, but it earned US$56.9 million in net revenue last year alone.

See also: Bukalapak’s financial performance in 8 charts

After a woeful start in the stock market, Bukalapak’s shares are finally on the rise, gaining around 34% in the last month. Perhaps investors are slowly waking up to the potential of ecommerce businesses in Southeast Asia. It’s clear that China’s ByteDance, the parent firm of short-video app TikTok, has been keeping a watchful eye.

As TikTok Shop launches in Thailand, Vietnam, and Malaysia following a pilot in Indonesia, my colleague Huong sizes up the new feature’s chances of success in the region and why it poses a significant threat to the dominance of Sea Group’s (SE, NYSE) Shopee and Alibaba’s (BABA, NYSE) Lazada in this premium piece.

— Shravanth

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