TikTok Invests $1.5 Billion in Indonesia’s GoTo to Expand E-commerce in Southeast Asia
In Brief
TikTok invests $1.5 billion in Indonesia’s GoTo to become the controlling shareholder of an e-commerce unit in Southeast Asia.
China’s TikTok is set to invest $1.5 billion as it aims to become the controlling shareholder of an e-commerce unit within Indonesia’s GoTo, the parent company of Gojek and Tokopedia, to provide future funding required by the business.
As part of the agreement, Tokopedia and TikTok Shop Indonesia’s businesses will be combined under the existing PT Tokopedia entity in which TikTok will take a controlling stake. The enlarged entity will operate and maintain the shopping features within the TikTok app in Indonesia.
The transaction is expected to conclude by the first quarter of 2024, with Tokopedia receiving a $1 billion promissory note from TikTok, earmarked for fulfilling working capital needs.
Goldman Sachs is acting as the financial advisor to GoTo Group for this transaction.
According to the announcement, the partnership will commence with a pilot period carried out in close consultation with and supervision by the relevant regulators.
The first campaign will be the Beli Lokal initiative which will launch on December 12th, coinciding with Indonesia’s National Online Shopping Day (Harbolnas) – a government program designed to grow Indonesia‘s digital economy by supporting local MSMEs. The campaign, which will be available on TikTok as well as Tokopedia, will promote a broad range of merchants, with a strong focus on Indonesian products.
TikTok, owned by China’s ByteDance, has 124 million users in Southeast Asia — and this move is aimed at transforming this sizable user base into a source of e-commerce revenue.
Responding to Indonesia’s Online Shopping Ban
The move follows the suspension of TikTok’s online shopping business in Southeast Asia’s largest economy due to regulatory concerns.
In response to Indonesia’s October ban on online shopping via social media platforms, intended to safeguard smaller merchants and user data, TikTok was compelled to shut down its e-commerce service, TikTok Shop. Earlier in the year, TikTok Shop had been launched in the Indonesian market to tap into its extensive user base, challenging the growth of online sellers like Shein and PDD Holdings’ Temu, whose rapid expansion was fueled by viral marketing on TikTok.
The announcement led to an 8.3% drop in GoTo’s shares, which encompasses ride-hailing, delivery, and financial services.
This decline followed a previous rally driven by investor expectations of a collaboration with TikTok. Under the proposed deal, TikTok is set to acquire a 75.01% stake in Tokopedia, Indonesia’s largest e-commerce platform, for $840 million. Additionally, TikTok Shop’s Indonesia operations will be integrated into the expanded Tokopedia entity.
To ensure the PT Tokopedia business continues to operate in the best interests of Indonesia’s digital economy, a committee under the enlarged entity will be established to facilitate transition and integration, chaired by Patrick Walujo, CEO of GoTo Group, with support from members of both businesses.
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Kumar is an experienced Tech Journalist with a specialization in the dynamic intersections of AI/ML, marketing technology, and emerging fields such as crypto, blockchain, and NFTs. With over 3 years of experience in the industry, Kumar has established a proven track record in crafting compelling narratives, conducting insightful interviews, and delivering comprehensive insights. Kumar's expertise lies in producing high-impact content, including articles, reports, and research publications for prominent industry platforms. With a unique skill set that combines technical knowledge and storytelling, Kumar excels at communicating complex technological concepts to diverse audiences in a clear and engaging manner.
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Kumar is an experienced Tech Journalist with a specialization in the dynamic intersections of AI/ML, marketing technology, and emerging fields such as crypto, blockchain, and NFTs. With over 3 years of experience in the industry, Kumar has established a proven track record in crafting compelling narratives, conducting insightful interviews, and delivering comprehensive insights. Kumar's expertise lies in producing high-impact content, including articles, reports, and research publications for prominent industry platforms. With a unique skill set that combines technical knowledge and storytelling, Kumar excels at communicating complex technological concepts to diverse audiences in a clear and engaging manner.
