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IPO

Indonesia's Bukalapak launches up to $1.5 bn IPO

E-commerce unicorn's listing could be local stock exchange's biggest ever

E-commerce company Bukalapak is a spearhead in Indonesia's digitalization drive. (Photo by Yuki Kohara)

JAKARTA -- Bukalapak, one of Indonesia's leading e-commerce platforms, has kicked off a $1.5 billion initial public offering that could value the company as high as $6 billion.

The startup on Friday announced it plans to offer new shares representing 25% of the post-IPO company at a price range of 750 rupiah (5 cents) to 850 rupiah (almost 6 cents).

If priced at the top of its range, Bukalapak would fetch 21.9 trillion rupiah ($1.5 billion), marking the Indonesia Stock Exchange's biggest-ever IPO. The previous record was 12.2 trillion rupiah, raised by major coal miner Adaro Energy in 2008.

A company valuation was not stated in Bukalapak's IPO prospectus, but a simple calculation indicates one of $6 billion at the top of the price range.

The company will begin trading on the IDX on Aug. 6 after offering shares to investors for three days starting July 28. Proceeds will be used for working capital for itself and its subsidiaries, Bukalapak said.

Its impending IPO means Indonesia's four original unicorns, the spearheads of the country's digitalization -- Gojek, Tokopedia and Traveloka being the other three -- will all eventually become publicly traded, a landmark in the transformation of the country's tech sector.

Unicorns are private companies valued at over $1 billion.

GoTo, which Gojek and Tokopedia are merging into, aims to go public in the U.S. and Indonesia, while Traveloka is said to be mooting a listing in the U.S. via a SPAC, or special purpose acquisition company.

Bukalapak started off as an e-commerce platform but was one of the first to move into the business of digitalizing Indonesia's warung mom-and-pop stores, allowing them to sell online products and services such as phone credits as well as allowing one-stop procurement.

Its largest shareholders are a subsidiary of local media conglomerate Emtek, China's Alibaba-affiliated Ant Group and Singapore sovereign wealth fund GIC. After the IPO, they will each hold 23.93%, 13.05% and 9.45%, respectively.

Other investors include U.S. tech giant Microsoft and Standard Chartered Bank.

Bukalapak booked 1.3 trillion rupiah in revenues in 2020, a 25.5% increase from a year earlier, according to the company's financial statement released on Friday. A total of 76% of its revenue came from its e-commerce business, while the e-warung business, which takes commissions from warung and the merchants selling to them, contributed 14.7%. Revenue from BukaPengadaan, which offers procurement services for corporate clients, made up the rest.

The company has posted net losses for the past three years but managed to trim the red ink last year. Its 2020 net loss of 1.3 trillion rupiah was 51.7% less than the previous year.

Competition in Indonesia's e-commerce space is expected to accelerate in the near term. Singapore-based Sea, through its e-commerce arm Shopee, has gained a strong foothold in the archipelago, while Tokopedia will be armed with fresh capital for expansion after GoTo goes public. Lazada, a company backed by Chinese internet giant Alibaba, is another player looking to seize a sizable piece of Indonesia's fast-growing market for online commerce.

"If we only focus on e-commerce, it is still mostly concentrated in big cities," Rachmat Kaimuddin, CEO of Bukalapak, said in an online investor presentation on Friday. "Seventy percent of e-commerce transactions are still in big cities, which are [just] 10% of the [Indonesian] population." He added that a big potential market lies outside of those big cities.

"Bukalapak's strategy is to have an online marketplace, expand [it] by opening an offline network through [the e-warung business] which can be additional infrastructure," he said. "In addition, the shops themselves can become Bukalapak customers."

Kaimuddin avoided giving a direct answer when asked if Bukalapak will seek a dual listing in the U.S. like GoTo. He responded that its "focus today is listing on the IDX."

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