TikTok to buy $1.5 billion majority stake in Indonesia’s biggest e-commerce platform Tokopedia
TikTok is gearing up for a comeback in the Indonesian e-commerce scene with a $1.5 billion investment in Indonesia’s biggest e-commerce platform Tokopedia. TikTok, owned by China’s ByteDance, announced on Monday that it will spend $840 million to acquire a majority stake in GoTo’s e-commerce unit, allowing it to relaunch its online shopping venture in Southeast Asia’s largest economy.
In addition, TikTok also plans to further invest in Tokopedia, Indonesia’s leading e-commerce platform, bringing the total investment to $1.5 billion, Reuters reported. As part of the deal, TikTok will buy 75.01% of Tokopedia and merge TikTok Shop’s Indonesia business into the expanded Tokopedia entity.
The deal is scheduled to close by the first quarter of 2024, and as part of the agreement, TikTok will issue a $1 billion promissory note to Tokopedia, earmarked for funding working capital needs.
TikTok had to shut down its recently established e-commerce service, TikTok Shop, in Indonesia following the country’s ban on online shopping via social media platforms in September, citing the protection of smaller merchants and user data.
Two years ago, Indonesia’s ride-hailing tech startup Gojek merged with Tokopedia. The new company, GoTo Group, was led by Gojek’s Andre Soelistyo as group CEO and Tokopedia’s Patrick Cao will be group president.
The agreement will undergo a trial period under regulatory supervision, including the collaboration’s compliance with local laws, the companies said in a joint statement.
GoTo, involved in ride-hailing, delivery, and financial services, anticipates multiple benefits from the partnership, not only in e-commerce but also in on-demand services and fintech businesses.
TikTok has been eyeing Indonesia’s active social media user base of over 270 million people to transform its 125 million users into a substantial source of e-commerce revenue. Currently, TikTok Shop is available in select countries, including the United States, Britain, and Singapore.
The Indonesian e-commerce industry is projected to grow to approximately $160 billion by 2030, up from $62 billion in the current year, according to a report by Google, Singapore state investor Temasek Holdings, and consultancy Bain & Co.