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Business deals

Grab takes 90% share in Indonesian digital wallet OVO

Superapp needs partner to skirt rule against foreign majority e-payment stake

Indonesian e-payment service OVO is now under Grab's control. (Source photos by Dimas Ardian and Reuters) 

JAKARTA -- Singapore superapp Grab has taken majority ownership of Indonesian e-payment service OVO, acquiring stakes from Tokopedia and local conglomerate Lippo Group as part of OVO's ownership restructuring.

The move will likely spark further transactions in the Indonesian digital payments industry due to the country's central bank prohibiting foreign majority ownership of an e-payment entity.

Legal filings show that as of Oct. 1, Grab holds 90% of Bumi Cakrawala Perkasa, OVO's parent, up from the previous 39%. Prior to the transaction, local e-commerce major Tokopedia had held around 41% of the entity but had to divest its shares due to its merger with Grab's rival Gojek to form GoTo. GoTo operates GoPay, another leading e-payment service in the country.

"We are pleased to complete the first part of a wider exercise to restructure our ownership. We welcome a greater commitment from Grab," OVO said in a statement on Monday. "We're working in close consultation with the regulators to complete the ownership restructuring process, and are confident this will allow us to better serve the financial services needs of Indonesians."

Meanwhile, a GoTo spokesperson said the transaction "has been planned for some time" and that it "will allow us to continue to focus on further deepening the market-leading strategy of GoPay and the broader GoTo Financial ecosystem."

Japanese financial services company Tokyo Century Corporation has also exited from OVO, the regulatory filing showed.

OVO initially started off as Lippo Group's rewards system within its corporate ecosystem, but expanded into e-payments in 2017. Lippo said it is not in a position to comment on the transaction at this time.

A person familiar with the matter said OVO will gradually be phased out from Tokopedia's ecosystem, with GoPay becoming the primary mode of payment on the e-commerce platform.

Aside from Grab's ownership, 5% of OVO is held by IDE Teknologi Indonesia, a firm with ties to an Indonesian company that Grab acquired, with the other 5% held by Cakra Finansindo Investama, a local investment firm.

Grab's acquisition of a majority stake in OVO will likely jolt a spate of transactions in the Indonesian e-payment space. A source said Grab will soon bring in local investors to acquire some stakes in the e-payment service.  Bank Indonesia's regulations dictate that at least 15% of an e-payment operator needs to be held by Indonesian citizens or entities. A Bank Indonesia official previously told Nikkei Asia that the central bank has "no plans to provide exceptions" to the rule. A Bank Indonesia official previously told Nikkei Asia that the central bank has "no plans to provide exceptions" to the rule.

Local media conglomerate Elang Mahkota Teknologi, or Emtek, may be a candidate to purchase such a stake. Prior to Grab's OVO transaction, two sources familiar with the matter said the conglomerate had been leading the race to acquire shares in OVO. Grab signed a strategic partnership with Emtek earlier in the year.

Emtek is the majority owner of another e-payment company DANA, also backed by China's Ant Financial. Bank Indonesia regulations also prohibit an entity from becoming a majority owner in more than one e-payment company, so should Emtek decide to get involved it will need to divest its DANA shares.

DealStreetAsia previously reported that Sinar Mas Group, one of Indonesia's largest conglomerates with businesses in property development, palm oil, financials and pulp and paper manufacturing, is in talks with Emtek to acquire DANA.

OVO was Indonesia's largest e-payment service in 2020 with a 38% market share, according to research by Boku, a U.S. mobile payments company.

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