Indonesia’s Gojek and Tokopedia are striking an $ 18bn merger

Gojek and Tokopedia, Indonesia’s two largest startups, have agreed on a merger that will create an $ 18bn food transport, ride hailing and ecommerce group that will reach southeast Asia.

The combined company, also to be called GoTo, will start preparing for a public list in Indonesia and possibly the U.S. this year, people familiar with the plans told the Financial Times. It targets the public market value of up to $ 40bn, according to people.

The deal will create the largest privately held technology startup in southeast Asia and give the group more firepower against funded rivals in the region including “Super app” Grab and ecommerce platforms Shopee, supported by SoftBank in Japan and Tencent in China, respectively.

SoftBank and Tencent also stand to benefit from the GoTo merger, as have each invested in Tokopedia and Gojek. Other investors backing the deal include Alibaba, Facebook, Visa and Google.

The news of the merger provides further evidence of how the southeastern Asian technology industry is coming of age. Investors invested in part because it was less affected by US-China tensions. foreigners investing in India, especially from China, was also hit by obstacles.

The merger announcement came weeks after Singapore chief executive Grab, which offers delivery services, ride-hailing and financial services, announced that recording the combination of a blank vehicle check. The deal costs Grab $ 40bn, and it will be listed on the Nasdaq this year.

The US -listed shares of Sea Group, the parent company of Shopee and gaming arm Garena, ningawas 395 percent last year.

While Gojek has operations in several countries in southeast Asia, GoTo has the strongest presence in Indonesia, the largest economy in southeast Asia and the fourth largest population in the world. The combined entity counts more than 100m monthly active users of its platforms and a total market value of more than $ 22bn by 2020.

Gojek co-chief executive Andre Soelistyo will lead the joint venture with Tokopedia’s Patrick Cao as president. Gojek’s other co-chief executive Kevin Aluwi will continue as head of the business, and William Tanuwijaya will remain chief executive of Tokopedia.

Soelistyo will also lead the financial services business GoTo Financial.

“We have high volume, ease of transaction transactions in Gojek, along with high volume Tokopedia, medium frequency ecommerce transactions,” Cao said. “GoTo will account for more than 2 percent of Indonesia’s gross domestic product and we will create more jobs and revenue opportunities as our company and economy grow.”

Sea, Grab and GoTo are likely to continue to burn through money to compete in southeast Asia, as all three companies are primarily focused on offering financial services to the underbanked population.

Investors say GoTo’s strength could be reached in many sectors.

“There is no modern internet company, in any part of the world that I know of, that owns so many categories at the same time,” said Shailendra Singh, managing director of Sequoia Capital India, which invested in the same company.

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