TikTok Makes a Billion-Dollar Move: $1.5 Billion Investment in GoTo Unit Signals E-commerce Resurgence in Indonesia. In an attempt to revive its online shopping operations that have been halted by regulators in the biggest economy in Southeast Asia. TikTok a Chinese company is investing $1.5 billion to acquire a majority stake in an e-commerce division of GoTo Gojek Tokopedia, an Indonesian company.
In an effort to safeguard users’ privacy and small businesses, Indonesia outlawed online purchasing on social media platforms in October. As a result, TikTok was forced to shut down its e-commerce business, TikTok Shop.
The operator of the short video app TikTok. Entered a few markets early this year to take advantage of its sizable user base and compete with rapidly expanding online retailers. Like Shein and PDD Holdings’ (PDD.O) Temu, whose quick expansion was aided by viral marketing on TikTok.
Following the news
Shares of GoTo (GOTO.JK), a company that offers financial services, ride-hailing, and delivery, fell 8.3% as some investors cashed in on the stock’s recent surge due to hopes of a partnership with TikTok.
“We need to see what kind of market disruption this partnership will bring about”. Pilarmas Investindo Sekuritas analyst Maximilianus Nico Demus stated.
As per the agreement TikTok would invest $840 million to purchase 75.01% of GoTo’s Tokopedia, the largest e-commerce platform in Indonesia. and integrate TikTok Shop’s Indonesia operations into the larger Tokopedia company.
The two companies released a statement on Monday stating. “The strategic partnership will commence with a pilot period carried out in close consultation with and supervision by the relevant regulators.”
More than 270 million people live in Indonesia, and many of them use social media regularly.
With 124 million users in Southeast Asia, TikTok—owned by China’s ByteDance—has been attempting to convert its sizable user base into a significant source of e-commerce income.
According to the firms, the deal would be completed by the first quarter of 2024. And Tokopedia will get a $1 billion promissory note from TikTok to help with working capital requirements.
“TikTok has committed to invest over $1.5 billion in the enlarged entity over time, to provide future funding required by the business, without additional dilution to GoTo,” according to the statement.
Tokopedia faces competition in Indonesia’s e-commerce sector from Chinese e-commerce behemoth Alibaba (9988.HK) and Singapore-based Sea (SE.N)’s Shopee.
Indonesia’s e-commerce market is expected to grow from $62 billion this year to around $160 billion by 2030, according to a research by Google, Singapore’s state investor Temasek Holdings, and consulting firm Bain & Co.
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