PT Elang Mahkota Teknologi Tbk. (EMTEK) announced the Capital Increase without Pre-emptive Rights (PMTHMETD) by issuing 4.75 billion new shares with a nominal value of Rp20, – per share. At the Exercise price of Rp1,954 per share, the company’s ownership sheet was purchased by Naver Crop., H Hodings Inc., and several institutions from Indonesia, including Allianz Life, Ashmore Asset Management, Manulife Aset Manajemen, Batavia Prosperindo, Elbara Perkasa, and Syailendra Capital.
The total value of this corporate action is around IDR9.29 trillion. In the release, the fundsis said to be used for investment and working capital in the company and its subsidiaries.
Specifically, Naver, as a technology giant from South Korea, has invested in the media conglomerate worth $150 million or equivalent to 2.18 trillion Rupiah. The company announced to the local media. It is interesting, because the two companies shared similar business, technology and digital media.
Naver said that this equity funding was aimed to advance the company’s operations in Southeast Asia. With the support from EMTEK, they expect to find new growth opportunities in the region, including Indonesia.
Currently, both Naver and EMTEK hold shares in Indonesia’s Bukalapak. Naver enter the list of the e-commerce unicorn investors through the Asia Growth Fund in early 2019, a managed fund initiated with Mirae Asset.
Through its investment arm, LINE Ventures, they also invest heavily in digital startups in Southeast Asia. Some of its portfolios operating in Indonesia include Grab, Carousell, iPrice, Warung Pintar, IDN Media, Zuzu, HappyFresh, and Amartha.
In his statement, Naver’s Head of Corporate Development & Investment, Lee Jung-an said that this partnership would create synergies in various areas. With a big vision to bring the business model of Asian companies to the global stage
In terms of market capitalization, EMTEK is one of the 10 largest companies in Indonesia. Its main business unit is media across multiple channels, including television, OTT platforms, and various online news outlets. Apart from Bukalapak, they also have a sizable stake in the DANA payment platform, the PropertyGuru proptech platform, and the OTA Reservasi.com. EMTEK also supports East Ventures’ managed funds, to focus on investing in Indonesia’s early stage startups.
Measuring synergy
In its home country, Naver becomes the market leader for search engine platforms. Meanwhile, there are three obvious businesses in Indonesia, LINE Messenger, Webtoon, and V Live.
LINE has the strongest user base among other units. However, its prestige has started to fade lately along with the dominance of other service users such as WhatsApp, Telegram, or Facebook Messenger. In terms of messaging application, EMTEK had its own bad experience when it started the BBM platform – which was finally shutdown in May 2019.
On the online media platform, both have quite good experience – especially when EMTEK leading the local VOD market through Vidio, at least, the application has often reached the top ranks in terms of traction in the last few months. Naver has capabilities through the Webtoon and V Live platforms which could be complementary to the existing integrated services. This is related to the advertising business which is one of the bricck and mortar of the two companies.
In addition, since 2019, Naver started to work seriously on fintech by establishing NAVER Financial. This business is in line with DANA, which continues to be promoted as an alternative to digital payments and a “super” app for various financial needs.
Meanwhile, for digital commerce, through Bukalapak, both have to think about the right steps to keep the platform at the top of the competition. Shopee with the support of Sea Group, and the Tokopedia-Gojek merger, deserves attention. Especially if you have the ambition [in the future] to bring the regional expansion business.
From the existing business model, there are some parts available for synergy between EMTEK and Naver. The birth of new services or applications from the synergy of the two companies will improve the quality of the digital media ecosystem in Indonesia amidst the ever-heating business competition.
To date, MNC Group has become EMTEK’s competitor. Apart from operating the media business, the corporation led by Hary Tanoesoedibjo has various other similar lines, including fintech and e-commerce businesses. In fact, their OTT platform is currently on the move to the US stock exchange through the SPAC channel which has recently been hotly discussed.
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Original article is in Indonesian, translated by Kristin Siagian
