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Ride-hailing companies Grab and GoTo are in talks to offer Indonesia’s sovereign wealth fund a “golden share” to gain approval for a potential merger that would create a $29bn south-east Asian tech giant.
Merger discussions include a proposal to give the sovereign wealth fund Danantara a minority stake in the merged entity, with special rights over the Indonesian arm, according to two people familiar with the matter.
The special rights would give Danantara, which was launched by President Prabowo Subianto this year and is seen as representing government interests, a say over issues such as drivers’ pay, said one of the people.
“This business is rife with political tensions because you employ so many people in the gig economy,” said the person. “You want to be close to the government.”
Singapore-based Grab and Indonesia’s GoTo, which runs the Gojek ride-hailing service, have held on-off merger discussions over the years. Talks have picked up steam this year, with an Indonesian official saying this month that the government, which is not an investor in either company, was discussing the merger.
The combined entity would control 90 per cent of Indonesia’s ride-hailing and food delivery market, creating an undisputed leader in south-east Asia’s largest economy.
The two companies are already important sources of jobs for a population that is increasingly dependent on informal work. GoTo alone has 3.1mn drivers for cars, motorbike taxis and deliveries, according to the company.
The drivers are an integral part of the economy, ferrying passengers through the country’s congested streets and delivering food, groceries and packages. Amid an increasingly difficult job market and economic slowdown, many Indonesians have turned to driving to earn an income.
The gig workers’ clout was on display when they joined thousands of other Indonesians in August to protest against extravagant benefits for lawmakers. They came out in force after Affan Kurniawan, a 21-year-old who drove for Grab and Gojek, died after being run over by an armoured police vehicle at a demonstration.
Prasetyo Hadi, Indonesia’s state secretary, said last week that the government was discussing a merger and that Danantara, which manages $900bn of state-owned assets, was involved in the talks.
“Because these are service companies that create jobs, the number of driver-partners are huge, and we are realising that they are . . . moving the economy,” he told reporters.
Citigroup analysts said the comments and Danantara’s role indicated an endorsement from the Indonesian government. However, given stalled merger talks in the past, “the possibility of failure or delay remains significant”, said analyst Ferry Wong.
Separately, GoTo shareholders including SoftBank have sent a memo to the board seeking the removal of chief executive Patrick Walujo at the company’s next extraordinary shareholder meeting, citing a sharp decline in share price, said two other people familiar with the matter, confirming a Bloomberg report.
SoftBank, which also owns shares in Grab, has long been pushing for a merger, said people familiar with the Japanese company’s thinking. SoftBank declined to comment.
GoTo said in exchange disclosures that it would hold a shareholder meeting on December 17 but that it was “not related to any planned corporate actions”. It also said “no decision or agreement” had been made regarding a deal with Grab.
Grab and GoTo had a combined market value of $72bn when they went public in 2021 and 2022, respectively. Their shares have plummeted since then, with Grab down more than half and GoTo down more than 80 per cent, because of fierce competition between the two in south-east Asia.
Analysts have speculated that Nasdaq-listed Grab, with a market value of $24bn, could take over $5bn Indonesia-listed GoTo in a potential merger, but ownership of the Indonesian entity has long been a sticking point.
In an interview with the Financial Times in March, GoTo chief Walujo said he was open to a merger, but the structure would need to be considered, as GoTo was a “national champion”.
Pandu Sjahrir, Danantara’s chief investment officer, said this week that “we’ll listen to what the government is recommending” and that the merger details would be left to the companies. He declined to comment on the golden share offer.
GoTo also declined to comment on the golden share offer. In a statement, the company said its board and management “have always supported government policies relating to the improvement of driver-partners and merchant welfare, including if this is to be achieved through a merger, acquisition or any other strategic corporate action”.
Grab declined to comment.
Additional reporting by Diana Mariska in Jakarta
