Southeast Asian Startups Examine IPO Opportunities

An e-commerce startup, Tokopedia is considering an initial public offering or IPO through a special purpose acquisition company (SPAC). Another Indonesian unicorn, Traveloka is reviewing a similar option. President of Traveloka Henry Hendrawan said that the company is planning to have an IPO soon.

Traveloka is also evaluating a potential merger with SPAC as an option to offer initial shares. “SPAC is one of the options being evaluated, because we have been approached by several people,” Henry said in an official statement quoted by Reuters on Monday (21/12). Henry had said that Traveloka plans to IPO in two exchanges, namely Indonesia and the United States (US).

He is also optimistic that the company will break even (break even point / BEP) at the end of the year or early 2021, if the travel industry recovers at least 50% compared to before Covid-19. Besides, it will soon be profitable. The eight-year-old startup claims its app was downloaded more than 60 million times.

IPO Scheme through SPAC is being Studied in Southeast Asia

This scheme has begun to be studied by many startups in Southeast Asia. Sources who are bankers, lawyers, and investors said that most unicorns ready to IPO in Asia are reviewing SPAC. “Currently, there is not a single conversation in Asia that does not discuss SPAC,” said head of Southeast Asia investment banking at Nomura, Sarab Bhutani, quoted by CNBC International, Tuesday (22/12).

One of the SPAC companies eyeing the Southeast Asian market is Bridgetown Holdings Ltd owned by billionaires Richard Li and Peter Thiel. The company took the floor on the US stock exchange last October and raised US$ 550 million.

“Southeast Asia is a target market considering the number of technology-based growths is high,” said Sarab. SPAC is called a blank check company because it doesn’t have any operations. This type of company is an investment vehicle designed specifically to raise funds for the rich.

Furthermore, the funds are used to finance merger or acquisition opportunities within a specified period. However, the target companies that are merged or acquired are not usually identified. The SPAC company is trending in the United States (US) and Europe. In Uncle Sam’s country, the total value is more than US$ 70 billion and has become one of the hottest Wall Street investment trends this year.

SPAC is One Potential Option for IPO

SoftBank also applied for a license to establish a special purpose acquisition company or SPAC on Monday (21/12). This Grab and Tokopedia investor plans to raise US$ 525 million for investment in technology companies.

The Japanese investment giant believes that the company has access to a variety of attractive opportunities with a broad global coverage and deep local network. One of SoftBank’s portfolios, Tokopedia, is considering an initial public offering or IPO through SPAC.

This e-commerce startup is even rumored to be reviewing a merger with Bridgetown. Tokopedia did not comment on the news reviewing the merger with Bridgetown. However, “SPAC is one potential option that we can consider. However, we have not decided yet,” said a Tokopedia representative, last Wednesday (16/12).

The Homeland Unicorn is indeed planning an IPO. “We have appointed Morgan Stanley and Citi as advisors on this matter. Currently, we have not decided on the market and method for this,” he said. Another SoftBank portfolio, Grab is also planning an IPO. However, the company did not specify the manner or timing of the initial public offering.

Grab and Gojek rejected Reuters requests for comment regarding the IPO via SPAC. Both are also rumored to be merging because of the encouragement of investors. Bukalapak also did not respond to a request for comment from Reuters. However, this e-commerce startup is preparing for an IPO.