Grab sees sudden spurt of Indonesian investors, but why?

Just a couple of months ago, Gojek completed a merger with another local hero, ecommerce unicorn Tokopedia, to form GoTo Group. The new tech powerhouse, which comes with a strong nationalist narrative, was set to give Gojek’s archrival, Grab, a serious run for its money.

But as it turns out, Grab’s tie-up with Indonesian media giant Emtek may be exactly what the Singapore-headquartered decacorn needs to stay competitive in Southeast Asia’s biggest market.

After Grab bought a 4.6% stake in Emtek in April, the tech and media conglomerate pumped a total of US$375 million into Grab’s Indonesian unit. Additionally, Emtek’s largest shareholder, the Sariaatmadja family, also participated in a US$4.5 billion private investment in public equity (PIPE) deal that was part of Grab’s merger with the Nasdaq-listed blank-check company Altimeter Growth.

Photo credit: Grab

Emtek’s support for Grab is emblematic of a sudden spurt of financial backing the super app has received from Indonesian conglomerates. Before 2021, only one Indonesian investor – Lippo Group – had ever made a contribution to the cumulative US$12.1 billion that Grab had raised.

This year, Grab has not only teamed up with Emtek, but it has also welcomed Indonesian conglomerates Djarum and Sinar Mas to its cap table after the pair took part in its PIPE deal. The tech giant also raised money from BRI Ventures, the VC arm of Bank Rakyat Indonesia.

Given the size of the Indonesian market, which is home to some 260 million people, getting the support of local strategic backers seems long overdue for the super app. However, Grab says that the delay is merely a result of the company’s meticulous approach to choosing its investors.

“Generally we have always been selective of our investors. Our preference is to work with partners who can also bring strategic value. This is not just from an Indonesia perspective but across Grab,” a company spokesperson tells Tech in Asia.

Hopping on an IPO ride

From an investor’s perspective, Grab’s “scattered focus” may have hindered its efforts to attract Indonesian investors, one executive at a local VC firm speculates. Gojek, which has given most of its attention to its home market, has significantly more local strategic backers, including Astra, Blue Bird, Blibli, Alfamart, Sampoerna, and Telkomsel.

“In the case of Astra, for example, they are sure that Gojek will stay in Indonesia and focus on getting bigger market share. So, for them, [Gojek] is the right choice,” says the executive, who wishes to remain anonymous.

Photo credit: Gojek

The recent uptick in interest on Grab may be driven by financial motives – the super app’s listing is drawing closer to the horizon. This is not an uncommon rationale for an investment. Djarum, for example, participated in Sea Group’s 2017 pre-IPO round through its VC arm GDP Venture.

However, there may also be a collaborative angle.

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