Southeast Asian ride-hailing giant Gojek has raised $1.2 billion for expansion, defying tech-sector turbulence and the coronavirus pandemic to secure funds to take on Grab Holdings Inc.
The new financing was finalized just over the past week, when the Covid-19 outbreak quickened its spread and triggered market routs across the globe. That took the total raised in its current financing round to just under $3 billion, the company said in an internal memo obtained by Bloomberg.
Gojek’s new funding marks one of the largest deals to emerge since the novel coronavirus erupted in central China in January, exacerbating economic uncertainty and chilling deal activity the world over. It comes at a time investors have grown increasingly wary about tech valuations, underscored by SoftBank Group Corp.’s struggle to justify lofty price tags for erstwhile high-flyers like WeWork and Oyo. The Japanese investment giant — which isn’t a backer of Gojek’s — has funneled about $3 billion into Singapore-based rival Grab.
“We’re not stopping there as we are still seeing strong demand among the investment community to partner with us,” Co-Chief Executive Officer Andre Soelistyo and Kevin Aluwi told employees in the internal memo. “There are a number of exciting ongoing conversations that we will be able to update you on very soon.”
The new capital puts Gojek in a stronger position in any negotiations with Grab: Southeast Asia’s two most valuable startups have reportedly discussed a possible merger, although Gojek has denied those reports and said it’s got no plans for any sort of combination.
Still, more money would allow Gojek to negotiate from a position of strength if they do decide to swap assets in certain countries or proceed with a full-blown merger. Both companies are losing money as they expand in ride-hailing, meal deliveries and payments, leading some of their investors to favor a truce. Regulators in Singapore, Indonesia and other countries however are likely to oppose any deal that reduces competition.
Gojek and Grab are competing well beyond ride-hailing in Southeast Asia, including in meal deliveries. Both aim to become consumers’ default, all-purpose app.
Gojek didn’t specify where its new money came from. Amazon.com Inc. was said to be one of the firms negotiating to join that funding round though it wasn’t clear if the e-commerce leader eventually invested. But the company suggested it’s still in talks with potential investors.
The deal conveys continuity at Indonesia’s most valuable startup after the co-CEOs replaced founder Nadiem Makarim at the helm. The entrepreneur left his company in October to become Indonesia’s education and culture minister.
Gojek, whose backers include Google, Tencent Holdings Ltd. and Temasek Holdings Pte, said it will use the new cash to keep expanding despite the present turbulence. The startup, which debuted an app for hailing motorbike taxis in Jakarta in 2015, now also offers a score of other on-demand services such as house cleaning and medicine delivery, and was last valued at $10 billion according to CB Insights.
“We announced a first close of $1 billion at the start of last year and we set ourselves a target to increase overall funds raised to $2.5 billion for the group by the start of this year,” Soelistyo and Aluwi said in the internal memo. “We have easily exceeded our target.”