TikTok takes controlling stake in Tokopedia, to pour $1.5b in merged biz (Update)

TikTok Shop offline activity in Jakarta / Photo credit: TikTok

TikTok Shop and Tokopedia have agreed to combine under the latter’s existing entity. The deal involves TikTok taking a 75% stake in the Indonesian ecommerce platform, according to a GoTo Group disclosure.

TikTok has agreed to invest over US$1.5 billion in the merged entity over time without reducing GoTo Group’s stake in Tokopedia. The deal is expected to close in the first quarter of 2024.

As of 11:59 a.m. Western Indonesian Time, GoTo shares are down almost 13% since market open today.

The partnership, which is subject to regulatory approval, would see the merged entity run and maintain the shopping features within TikTok’s app in Indonesia.

GoTo said it would remain an ecosystem partner to Tokopedia through its financial and on-demand services via GoTo Financial and Gojek, respectively.

TikTok’s ecommerce arm was shut down two months ago in Indonesia after the government banned direct ecommerce transactions on social media apps.

TikTok Shop and Tokopedia’s partnership will start with a pilot period, which the pair will look to carry out in consultation with and supervision by Indonesian regulators. Beli Lokal, which is launching on December 12, will be the partnership’s first campaign.

Beli Lokal enables TikTok’s over 106 million users in the country to engage and shop with local merchants. The campaign will be available on both TikTok and Tokopedia platforms.

Previous analysis from Tech in Asia, citing data from Momentum Works, found that Tokopedia and TikTok would jointly command a 40% market share of Indonesia’s ecommerce landscape. This surpasses the 35% share that Sea Group’s Shopee holds in the country.

See also: Is the potential TikTok Shop-Tokopedia deal just a strategic stopgap?

Update (December 11, 1:30 pm): This article was updated to include details from GoTo Group’s disclosure on the IDX and GoTo’s share price movement.