Bukalapak’s IPO size has grown exponentially in a short period of time. Initially, the company sought to raise US$300 million. Strong investor interest prompted the e-commerce firm to increase the offering’s size to US$800 million, then US$1.13 billion and now US$1.5 billion. According to Reuters, Bukalapak has attracted interest from long-only funds, domestic investors and sovereign wealth funds for its listing. Key long-time backers of the company include Singapore sovereign wealth fund GIC and Microsoft.
The Bukalapak and GoTo listings (expected to raise up to US$2 billion) should vivify Indonesia’s languid IPO market, which has not seen a blockbuster debut in years. While the pandemic failed to dent investor enthusiasm for IPOs in some markets last year – notably Hong Kong – that was not the case in Indonesia. In fact, according to Refinitiv, funds raised via Indonesia IPOs fell more than 50% to US$470 million in 2020.
The Bukalapak IPO comes amid a concerted regulatory overhaul of Indonesia’s capital markets. Pandu Sjahrir, a commissioner at the Indonesia Stock Exchange (IDX), told Bloomberg in June that authorities are finalizing details of new regulations that will allow firms to go public with multiple classes of shares carrying different voting rights. Restrictions on loss-making firms will be also be relaxed. The latter move will be especially integral to ensuring a steady stream of tech listings on the IDX. Up-and-coming platform companies are often loss-making for years because of their focus on user acquisition to build scale.
Like GoTo, Bukalapak is eager to provide investors with a successful exit and have access to inexpensive fundraising in public markets to better compete with Singapore-based Sea Group, which is in the midst of an aggressive Indonesia play. Sea is the top e-commerce platform by several metrics in Indonesia and is making fast inroads with its Shopee Pay e-wallet. Sea also recently acquired the incumbent lender Bank BKE, which it plans to transform into a digital bank.
While Bukalapak's core business is e-commerce, it has counted Bank Rakyat Indonesia (BRI) as an investor since April, when the state-owned lender invested an undisclosed amount in the company. The investment was reportedly in the tens of millions of U.S. dollars. Thanks to that deal, Bukalapak will be able to offer BRI’s digital banking products (including loans) to customers, allowing the e-commerce company to better compete with rivals like GoTo, Sea and Grab that already have a sizable suite of fintech services.