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Start-up Bukalapak debuts on Indonesia bourse in record $1.5bn IPO

By Andreas Ismar

06:45, 6 August 2021

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Bukalapak users
Bukalapak users - Photo: Shutterstock

E-commerce start-up Bukalapak (which means ‘open kiosk’) makes its debut on the Indonesia Stock Exchange today, following an all-time high initial public offering of IDR21.9trn ($1.5bn).

There was strong interest from international and domestic investors, and its share price soared 25% above its IPO price.

The listing marks the first technology start-up to be listed locally and seen as precursor for future listings of other local high-growth companies. Bukalapak’s share price hit IDR1,060 at midday break, valuing the company at about $7.5bn.   

The share offering of Bukalapak - backed among others by local conglomerate Emtek Group, Singapore’s sovereign wealth fund GIC, and Alibaba-affiliated Ant Group – was oversubscribed by over nearly nine times, according to co-underwriter Mandiri Sekuritas.    

Strong home support

Retail investors subscribing to share offering of the 11-year company amounted to more than 100,000 individuals, many of whom buying stocks for the first time, and prompted underwriters to double the allotment for small-time investors to 5%. Institutional investors, domestic and overseas, numbered at around 150.

In a press conference following the bell-opening, 10 cabinet ministers sent goodwill messages, drumming up nationalistic pride at time when the country is struggling to contain the COVID-19 outbreak.   

“I’m genuinely surprised with the amount of reception, and moreover, the ability for local market to absorb a deal of such size,” a merger and acquisition adviser told Capital.com. The Bukalapak’s IPO alone is four-fold compared with the amount raised from 51 new listings in the whole of 2020.

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Focus beyond urban areas

“This landmark deal… is not about Bukalapak, but about the potentials of Indonesia’s economy and its micro, small and medium enterprises outside the major cities,” chief executive Rachmat Kaimuddin said in the press conference. The platform has around 6.5 million online sellers and about 7 million brick-and-mortar stores.

In the e-commerce segment, Bukalapak is ranked fourth after home-grown Tokopedia, Singapore-headquartered Sea Ltd, and Alibaba-backed Lazada. The company’s strategy, is therefore to reach out the tier-2 and tier-3 cities and creating offline-to-online channel by digitising mom-and-pop shops scattered across the archipelago.

Nomura said that Bukalapak ecosystem caters to the needs of its target micro retail market as it combines financial services such as e-money top-up and payment services, book-keeping, ability to top-up phone credit and get discount vouchers, as well as connecting fast moving consumer goods companies directly with millions of small stores.

Turn to profit in 2025

Nomura initiated a ‘buy’ call, with target price of IDR1,620 per share, implying a 91% upside from Bukalapak’s IPO price of IDR850.

“We believe maintaining strong market shares in non-tier 1 cities is key for it to deliver positive profit. In addition, we believe Bukalapak’s strong Mitra ecosystem (Mitra Bukalapak, a platform for medium, small, and micro enterprises) is a fundamental pillar of its continued success,” Nomura said, suggesting that the company may turn to profit in 2025.

With the successful listing of Bukalapak, the Indonesia Stock Exchange (IDX) is seeking to attract more tech IPOs, with unicorns such as GoTo – the most valuable local start-up – and Traveloka being the most obvious targets. Start-ups valued between $500m and $1bn – two dozens of them - are also under IDX’s radar.  

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Read more: E-commerce firm Bukalapak eyes biggest Indonesian IPO in a decade

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