Indonesian based marketplace service, Tokopedia, as reported by Bloomberg, is currently exploring possible IPO on the New York Stock Exchange through Bridgetown’s Special Purpose Acquisition Company (SPAC) backed by well-known Silicon Valley investor Peter Thiel (through Thiel Capital) and Hong Kong conglomerate Richard Li (through the Pacific Century Group). Bridgetown shares surged to 29% after today’s market close.
As we contacted one of Tokopedia’s representatives, there is no further statement regarding this matter.
Through the disclosure at the IPO on October 16, the blank check company Bridgetown aims to support Southeast Asian companies focusing on the technology, financial services, or media sectors to go public. Bridgetown secured $550 million (around Rp.7.8 trillion) in public funding from the IPO.
According to a Bloomberg report, Tokopedia’s possible IPO is still in its early stage and if it’s true, around next year, the company’s market capitalization is to reach the peak at $8-10 billion (110-150 trillion Rupiah).
Tokopedia is currently the second-largest [valuation] unicorn in Indonesia, after Gojek. Sea Ltd which operates Shopee, its closest competitor, had an IPO on the New York stock exchange in 2017 with the current market capitalization of over $96 billion or around Tokopedia’s ten times.
Pacific Century Group is currently involved as Tokopedia’s investor with Bridgetown’s CEO and Pacific Century Group’s SVP Daniel Wong serving on Tokopedia’s board of commissioners, according to Bridgetown’s SEC S-1 data filing. In Indonesia, Pacific Century Group’s business is known as FWD insurance company.
SPAC’s current reputation
The arrival of the blank check company, SPAC, paints a new color to the company’s IPO method in developed country exchanges, especially the United States. From our observation, approximately $78 billion of public funds have been disbursed through SPAC on US exchanges this year. In comparison, only $13 billion in funds went public using the same methods last year, increased by 6 times.
SPAC makes it easy for companies to go public, as IPO tends to be a long and complex process to ensure accurate financial data and assess the integrity of its executives. The downfall of WeWork’s IPO last year has proven the difficulty of startups that failed to comply with good governance principles to go public.
SPAC has no complex financial data to be audited, therefore, the process tends to be easier, within just weeks, not months for the IPO.
After going public, SPAC is to merge with a private company, therefore, the company can automatically be listed (direct listing) on the stock exchange.
Pandemic conditions have not dampened the euphoria of listings this year. New York stock exchanges, including the Nasdaq technology stock exchange, have broken all year-long index listing records. Several technology companies’ IPOs throughout this year are also considered to have received positive responses from the market, for example Snowflake, DoorDash, and the latest Airbnb.
To date, Tokopedia has raised $2.8 billion funding from investors (around IDR 40 trillion) according to the data compiled by DailySocial and Crunchbase. The company has just introduced Google and Temasek into its ranks of investors this year.
SPAC’s existence as a new means for IPO provides a big chance for private investors who want to exit through the stock market. However, it’s still necessary to watch over this scheme to reduce the risk of investors’ failed to chip in, which will remind us of the dotcom bubble 20 years ago.
This year, Nikola becomes one of the SPAC graduates that steals the spotlight as the business practice is considered “deceiving the public“. This led to an investigation by the United States Department of Justice and the resignation of Nikola’s Founder, Trevor Milton.
In Indonesia, the SPAC scheme is not quite common. On several occasions, the Indonesian Stock Exchange (IDX) keeps encouraging unicorn startups to go public in dual listings, on local and foreign exchanges, in order to provide opportunities for local investors to be a part of domestic startups.
J.P. Morgan through the Indonesia Equity Strategy 2021 report projects Tokopedia in the #10 position for the company with the largest capitalization in LQ45 if it is to go public today at IDX.
Tokopedia’s Co-Founder and CEO, William Tanuwijaya has given hints that the company is to go public in the next 1-2 years since last year.
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Original article is in Indonesian, translated by Kristin Siagian
