Indonesia's Unicorn Marriage Is Brilliant But Risky

(Bloomberg Opinion) -- An $18 billion merger between Indonesia’s transportation king Gojek and e-commerce giant PT Tokopedia would create the kind of champion Southeast Asia’s largest nation deserves. The real synergies may be hidden below the surface, just like the landmines they face.

Both are ready for a possible deal, with a view toward an initial public offering, Bloomberg News wrote Tuesday. Term sheets have been signed and due diligence is next, according to the report. A Jakarta listing is a near certainty to show patriotism, while an overseas sale — perhaps in New York — is also likely.

With one side selling products online and the other delivering goods and people, the natural symbiosis would appear to be through logistics in a sprawling country that spans 5,100 kilometers (3,200 miles) across about 18,000 islands. That’s the kind of end-to-end infrastructure that companies like Amazon.com Inc. dream about.

Yet the killer combo comes on the back end in the fintech realm. Both companies, along with Gojek rival Grab Holdings Inc., are keen to expand beyond their founding business models into services such as payments, banking, insurance and loans. Ride-hailing provider Gojek has over 190 million app downloads across the region, with its core market among Indonesia’s 267 million people. Fintech will be the next growth driver. More than half the nation’s adults don’t even have a bank account, it said recently.

When consumers and businesses are using your apps to buy and sell products, as well as book and deliver transport, you’ve suddenly got access to millions of customers at multiple touch points. This boosts sales and marketing opportunities exponentially, and provides a depth of data that few rivals can compete with.

Throw in the required regulatory licenses, and the possibility of creating a financial powerhouse is right there. But so too is the potential to mess it up.

Mergers rarely go smoothly, and unicorn marriages are even more unusual. While now may be the perfect time to hook up, since the growth of their core businesses was already set to slow even before Covid-19 hit the broader economy, the mechanics and internal friction from a deal could threaten their momentum. Any shakeup of management, job losses, integration of systems, or clashes over direction could distract from the larger challenges of transitioning into a giant company that’s really ready for public scrutiny.

That’s not to say they shouldn’t try. As the world’s fourth-most-populous nation, Indonesia deserves a glorious unicorn wedding. But don’t be surprised if the couple discovers that married life isn’t always blissful.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.

©2021 Bloomberg L.P.