A version of this article was first published on FinanceAsia.
Indonesian e-commerce unicorn, Blibli, is planning to raise up to IDR8.17 trillion ($530 million) through an initial public offering (IPO) on Indonesia’s Stock Exchange (IDX), in what would be the biggest listing on the Southeast Asian bourse since superapp, GoTo’s attention-drawing $1.1 billion IPO, earlier this year. The deal is also set to follow the $1.5 billion listing of e-commerce unicorn, Bukalapak, in 2021.
But some experts believe the company should remain wary, given the poor performance of both of these stocks following their blockbuster listings.
“Blibli may learn particularly from Bukalapak…which has lost a staggering 66% of its value [since listing]. This could signal more trouble ahead for future tech listings by unicorns,” Marshall Situmorang, founder and partner at Indonesian law firm, Nusantara Legal Partnership, told FinanceAsia.
He elaborated on the factors at play.
“We note that the “bearish” [performance of] Bukalapak’s shares was mostly due to the exit of their foreign investors after the IPO took place.”
“Additionally, GoTo, whose IPO was viewed as successful, [was] also unable to maintain the stability of its share price. This may not be entirely due to the company’s performance, but also a result of the global economic climate,” he explained.
Elsewhere, firms have been forced to delay or downsize their offerings due to dampened market conditions. Examples include logistics player, GoGoX, which was forced to downsize its Hong Kong IPO by 83%, when it listed in June. Additionally, Chinese electric vehicle maker, Leapmotor, is looking at an $800 million Hong Kong listing, in spite of an initial target of $1.5 billion.
Meanwhile, GoTo is approaching the end of an eight-month lock-up period (during which investors are not allowed to redeem or sell shares bought at the time of IPO) and according to media reports, the company recently confirmed ongoing discussion with major backers, including Alibaba and Softbank, to convince them to hold their shares, in order to avoid a stock price crash.
However, Situmorang believes that Blibli could be an attractive stock for investors, given that the company is backed by one of Indonesia’s largest conglomerates, Djarum Group. Although operating in the tobacco space, the firm is owned by one of Asia’s wealthiest families.
“Blibli has good prospects for long-term investment due to the growing digital economy and the development of technology in Indonesia. Also, Blibli has a large ecosystem, which has a positive sentiment for the company,” he explained.
Over the past years, Blibli has acquired supermarket chain, Ranch Market, and travel booking site, Tiket.com, to build an omnichannel platform.
The company may also benefit from wider investor confidence in Indonesia, suggested Herston Elton Powers, managing partner at regional venture capital firm, 1982 Ventures.
“Indonesia has been the best-performing Asia-Pacific market so far this year, which provides confidence to its founders and backers that the IPO window is not completely shut,” he told FA.
“Blibli and its advisors may consider a strategy that allows for an exit at reasonable valuation and size now, while waiting for the market to recover, and consider a follow-on offering or secondary listing to raise more capital at a higher valuation,” he added.
Indonesia is hoping to attract homegrown tech unicorns to choose its exchange as a listing destination and to this avail, in December, it introduced a new framework for listing dual class shares. Such an equity structure allows founders to retain management control, even if they lose their majority shareholding after IPO.
This, Situmorang posited, might be an option for Blibli to consider.
Currently, Indonesian investment firm, Global Investama Andalan (GIA) owns a 98.46% stake (equivalent to 99.15 billion shares) in Blibli; 163 investors own 1.45%; and the remainder is shared among five executives, including CEO and co-founder, Kusumo Martanto, the firm's prospectus shows.
Following IPO, GIA’s ownership will fall to 83.69% and the 163 investors will hold 1.23%.
IDX commissioner, Pandu Sjahrir, told FA that he hopes the latest listing will attract further high-growth companies to participate locally, by showing that the exchange has the “liquidity and the execution capacity” for these companies.
“Hopefully this new listing in Blibli further solidifies IDX as the main place for high growth companies to list. We look forward in working together with them for a successful listing,” Sjahrir said.
To further incentivise local activity, Indonesia has longstanding tax rules in place that make it more attractive for local firms to go public domestically before seeking an overseas listing.
Asked whether he thinks Blibli will consider a secondary listing in the US – activity that GoTo and Bukalapak are rumoured to be exploring – Situmorang considers this “unlikely”, given the track record of other Indonesian companies to date, which has seen telecommunications providers, such as Indosat and Telkom, choose to delist; coupled with the current conditions of the global economic climate.
Blibli’s public offering will run from November 1-3 and it will begin trading on November 7 under ticker code, BELI. BCA Sekuritas and BRI Danareksa Sekuritas will act as bookrunners for the transaction.