Traveloka’s plan to go public on the stock exchange is getting obvious. In an interview with Bloomberg, Traveloka’s Co-Founder & CEO Ferry Unardi said, after going through his most difficult period at the beginning of the Covid-19 pandemic, this year is the right time for companies to go public. He believes that the company’s current state is great and the market is quite welcoming.
He said Traveloka’s business model has a clear profit path. Currently, its main business (travel and accommodation) is claimed to be profitable, while continuing to explore other business models, such as fintech. One of Traveloka’s focuses is providing paylater services.
He also implied that the company has been prepared to go public this year. Ferry has mentioned that Traveloka is to go public on the New York Stock Exchange (NYSE), then the local stock exchange.
The SPAC scheme may be an option due to its efficiency in terms of time. He emphasized that companies like Traveloka need an agile approach, therefore, they can focus on executing business growth post going public.
Previously, a Bloomberg source said Traveloka had chosen JPMorgan Chase & Co. as a strategic partner to explore potential IPOs on the NYSE. In addition, a Reuters source said, several blank check companies were in discussion to help with this process, including Provident Acquisition, COVA Acquisition, and Bridgetown Holdings.
SPAC is becoming a startups’ choice to go public on the NYSE. In a simple way, a blank check company that already goes public will conduct M&A on startups in need to go public on the stock exchange, therefore the startup is automatically listed on the exchange (direct listing). The process is faster, it can be within weeks as it doesn’t require a complex financial reporting process like the traditional IPO.
Traveloka is a leading regional OTA platform that is available in 6 Southeast Asian countries and Australia.
Is it the right momentum?
The pandemic had stopped the OTA business globally. Traveloka transaction volume was seriously affected. Ferry claims, the company started to climb back up in July 2020, and the transaction volume has getting recovered, reaching 50% pre-Covid-19, making their core business profitable.
Last year, Traveloka has secured new funding of $250 million or the equivalent of 3.6 trillion Rupiah. In order to raise the fund, Traveloka’s valuation is estimated to drop to $2.75 billion (nearly 40 trillion Rupiah). This down round action was taken because the company’s business was hit by Covid-19 and experienced a decrease in service traction.
There are some risk mitigation acts as the impact of Covid-19, one of which was performing business and operational efficiency. The company reportedly made a significant number of employee layoffs. Domestic travel is being optimized to maximize sales potential amid the relaxing massive social restrictions implemented in many regions.
It becomes an interesting question, after the business dropping and conditions are yet to fully recovered (especially in the travel industry), is this the right time for an IPO? What is clear is that Traveloka’s IPO plan has been revealed since before the pandemic. At the end of 2019, Ferry said that the startup is to perform an IPO in the next 2-3 years.
We had a chance to talk with Traveloka’s early investors, Willson Cuaca, Managing Partner of East Ventures and EV Growth, regarding the startup’s IPO process. He said that the pandemic will not affect the IPO plans. He said Indonesia’s startup current situation is quite ready.
“Whether there is a pandemic or not, the IPO is about time. For example, Tokopedia is 11 years old, Traveloka 8 years old, and others. Besides, monetization has getting visible, many have started to be profitable, the roadmap is getting clear, it’s only a matter of means. However, due to the pandemic, the government has issued more initiative. [..] It can accelerate the opportunity for IPO,” Willson explained.
Apart from East Ventures and EV Growth, Traveloka is also supported by some other investors, such as GIC, Expedia Group, and Rocket Internet. The company’s valuation is estimated at $3 billion and they want to go public on the stock exchange with a market capitalization of $4-6 billion.
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Original article is in Indonesian, translated by Kristin Siagian
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