Is Blibli’s IPO a risk worth taking?

Blibli aims to raise US$528 million through a listing on the Indonesia Stock Exchange on November 7. The ecommerce firm is backed by major Indonesian conglomerate Djarum Group, which is owned by the Hartono brothers – the richest people in Indonesia, according to Forbes.

The IPO could boost Blibli’s valuation to US$3.5 billion. It will also make it the third Indonesian unicorn to go public, after Bukalapak and GoTo. In comparison, Bukalapak’s current value is US$1.7 billion, while GoTo’s is US$16 billion.

An industry analyst – who declined to be named – says Blibli’s IPO move amid current economic conditions is a “tricky one.” Though, he believes that “the valuation looks to be reasonable.”

Paulus Jimmy, deputy head of research at Indonesia-based brokerage firm Sucor Sekuritas, says that the ecommerce firm’s IPO plan makes sense to strengthen its operations.

“It may not be the best time for a tech company to go IPO, but it’s also not the worst time,” Jimmy tells Tech in Asia.

He adds that if the Federal Reserve raises its rates further and does not cut them next year, “a recession in the US is definitely unavoidable, and is usually followed by a massive sell-off in the market. If they wait until next year for the IPO, the worst could happen.”

Niche in affluent consumers

Blibli lags Shopee, Tokopedia, and Lazada in Indonesia, both in terms of downloads and active users.

A Momentum Works report on Indonesia’s ecommerce marketplace put Blibli in the third tier, along with JD.id.

Even so, Blibli has its own niche to thrive amid the competition, which is its focus on affluent customers. Its signature strategy is to guarantee the products sold on its platform are original.

This is similar to the approach taken in China by JD.com, which has built a reputation for selling “authentic products” and is highly rated by consumers for being “trustworthy” and “high-end.”

See also: Can JD.com make a splash in SEA?

Accelerating revenue growth

In the prospectus for the offering, Blibli reported that its net revenue reached US$434 million in the first half of 2022, a 124% increase from US$194 million in H1 2021.

Widening negative EBITDA, short runway

Strong backer in Djarum