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Startups

Indonesia's Tokopedia speeds IPO plan, selects advisers

E-commerce unicorn weighs working with acquisition specialist

Tokopedia appointed U.S. banks Morgan Stanley and Citibank to advise it on its initial public offering. (Photo by Dimas Ardian)

JAKARTA -- Indonesian e-commerce company Tokopedia has appointed U.S. banks Morgan Stanley and Citibank as advisers for its initial public offering as it seeks to expedite plans to go public.

The move comes as interest in Southeast Asia's biggest tech companies grows along with the region's digital economy and the rise to stardom of Singapore-based Sea, which is listed on the New York Stock Exchange.

"We are considering to accelerate our plan to go public, and we have appointed Morgan Stanley and Citi to be our advisers," a Tokopedia representative said in a statement, adding that the pandemic has led to growth in its business. The spokesperson said the company has not decided where to list or the mode of listing.

The company also confirmed that it has held talks with Bridgetown Holdings, a special purpose acquisition company backed by Hong Kong billionaire Richard Li and investor Peter Theil.

SPACs, also known as blank-check companies, are entities with no commercial operations that are set up to raise capital through IPOs with the aim of acquiring existing companies. While such companies have been around for years, they have become popular again in the U.S. this year.

Regarding the talks with Bridgetown, the Tokopedia spokesperson said: "SPAC is a potential option that we could consider but we have not committed to anything at the moment."

The unicorn -- as unlisted companies valued at over $1 billion are called -- is backed by Japan's SoftBank Group, which is run by tycoon Masayoshi Son through its embattled Vision Fund. In January this year, Tokopedia President Patrik Cao told Nikkei Asia that the company would probably list within three years, with a dual listing in Indonesia and "most likely" the U.S.

The world has changed drastically since then, with the coronavirus pandemic accelerating the online shopping trend as people limit their time outside the home. That has benefited Tokopedia, one of the largest e-commerce platforms in Indonesia, allowing it to speed up plans to go public.

There has also been heightened interest among investors in Southeast Asia's big tech companies, owning to the region's rapid growth as a digital market. Singaporean gaming and e-commerce company Sea, which is listed on the New York Stock Exchange and operates in six markets in Southeast Asia, has seen its share price rise fivefold this year, with the company's valuation reaching $100 billion at one point.

Not many Southeast Asian tech companies are listed in the U.S. and should Tokopedia decide to list there it will offer investors an alternative means to bet on the region's growing tech market.

Investors in both Gojek and Grab, two of the biggest private tech companies in the region, are also pushing for the merger and IPO of the two companies, as they eye Sea's share price surge this year.

A person with knowledge of Tokopedia's negotiations said that the "indications are a preference for a public listing at this juncture, as it fits in with Tokopedia's own growth plans and the promises made to Google and Temasek recently." The company recently received fresh funding from both companies, reportedly around $350 million.

"Obviously it will come down to the valuation, and banks are confident of exceeding the valuation reached in the last round of fundraising. However, an IPO will take a few months and if the market outlook changes, they will opt for SPAC or further fundraising. [Tokopedia] will continue discussions with Bridgetown."

Additional reporting by Narayanan Somasundaram.

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