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Heated up

30 July 2021 By Sharon Lam

Grab’s tiny deal is shining a spotlight on Indonesia, and its importance to the Singapore-based company’s future growth. It’s strengthening its alliance with a local digital media conglomerate as the super-app valued at $40 billion by a special-purpose acquisition company hurtles towards a debut in New York. The tie-up follows the announced merger of ride-hailing and e-commerce rivals Gojek and Tokopedia, whose combination creates a similarly sized entity and an Indonesian powerhouse.

Businesses working across Southeast Asia thrive on partnerships but this one is eye-catching for its timing and its target. Emtek is injecting $375 million into Grab’s Indonesian unit, with the ride-hailing-to-payments giant also taking a stake in the buyer for an undisclosed amount. The pair will look to collaborate on everything from logistics to financial services. What’s more, Emtek owns roughly a third of Bukalapak, the e-commerce company in the process of a $1.5 billion initial public offering. For now, Grab isn’t interested in pushing into the sector but this deal lays the ground for a deeper future tie-up if it changes its mind.

One of Grab’s top attractions is that it has a well-established regional footprint spanning eight countries from Malaysia to the Philippines, with no country contributing more than 35% of its adjusted net revenue. Its newly enlarged rival, GoTo, on the other hand, has operations in high-growth Vietnam and rich, developed Singapore, but is primarily focused on its home market Indonesia. It is also consolidating its focus: Gojek agreed to swap its Thai business for a stake in AirAsia’s lifestyle super-app earlier this month, effectively unwinding its position there.

GoTo’s combination, and the Emtek deal, emphasises the outsize strategic value of the $1 trillion economy, where rivals from Alibaba’s Lazada to Sea’s Shopee compete. Indonesia is by far the most populous country Grab operates in and the one with the biggest potential to drive future growth. But by the time Grab’s SPAC merger is completed later this year and it debuts, the scarcity value of tradeable Southeast Asian giants may be eroded: GoTo is gearing up for listings in both Jakarta and New York. The reception of these companies will deliver a verdict on what excites investors more – a regional giant, or an Indonesian one.


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