Bukalapak's $1.1 Billion IPO was covered by sources

The largest IPO in Indonesia for more than a decade was the Bukalapak offering, a billion-dollar offering from e-commerce firm Bukalapak. Two sources claim that enough investors ordered were received to cover Friday’s launch. This reflects strong demand for tech stocks.

This listing occurs at a time when Indonesia’s $40 billion e-commerce market is experiencing increased demand. Bukalapak has tended to target smaller clients to compete with larger rivals Tokopedia and Sea Ltd’s Shopee, as well as Alibaba’s Lazada.

 

According to two sources, the deal was made possible by a flurry of orders from large investors.

Because they weren’t authorized to speak to the media, the sources refused to identify themselves.

Bukalapak was the fourth largest e-commerce firm and had only sought to raise $300 million. This grew to $800million and this week, it increased the offer by 25% as investors vied for a share of the company.

Rudiyanto from Panin Asset Management, Jakarta, said that the company is the first to go public in Indonesia as a tech unicorn. A unicorn is a private start-up that has a valuation of $1 billion.

Bukalapak’s name, which means “opening a kiosk” in Indonesian, seeks to raise $1.13 billion through the sale of as much as 25% of its enlarged capital. The shares are being sold at 750 to 850 rupiah each.

It seeks a valuation of at least $5.6 billion, doubling the level it was valued at two years ago. The company is supported by GIC, Ant Financial, Emtek, Microsoft, and local media conglomerate Emtek.

Bukalapak's $1.1 Billion IPO was covered by sources

The books for the IPO remain open through July 19, when prices will be determined. The company will make its public debut on August 6.

Bank of America and UBS serve as the global coordinators and bookrunners for Mandiri.

“Our business is focused primarily on small, medium, and micro-sized businesses. They are the main movers of the Indonesian economy,” Rachmat Kaimuddin, CEO Bukalapak, told investors at an online briefing.

“The potential to digitalize them and cater for underserved markets is very promising, especially outside of big cities.”

He said that around 30% of Indonesia’s e-commerce transactions took place in second-tier cities last fiscal year. However, this share could rise to 48% by 2025.

More than 60% of the IPO proceeds will go to the business. It had a revenue of $95.8million in 2020 and has more than 100 million users. The rest of the proceeds will be used for the expansion of Bukalapak subsidiary companies.

Indonesia is home to many start-ups and has one of the fastest-growing online shopping markets in the world. It boasts a population of over 270 million.

GoTo, the merged entity from Tokopedia, ride-hailing and payments company Gojek, plans an IPO. According to sources, GoTo plans to raise a minimum of $2 billion in pre IPO funding within the next few months. This will be followed up by a local listing.

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Rudiyanto, Bukalapak’s IPO said that “This will also serve as a test of the water for the upcoming IPO by GoTo.”

Bukalapak’s and GoTo’s debuts are expected to boost Indonesia’s long-stagnant IPO market. This market was further hampered by the pandemic. According to Refinitiv data, the amount of money raised by IPOs increased more than half to $470 million in 2020.