Billionaires Richard Li Tzar Kai and Peter Thiel are in early-stage talks about making a minority investment in Indonesian e-commerce firm Tokopedia, a person familiar with the matter said on Wednesday.
Hong Kong-based Li and Silicon Valley entrepreneur Thiel created a blank-cheque company, Bridgetown Holdings, and listed it on Nasdaq in October, raising US$595 million. It is this vehicle that has approached Tokopedia, the person familiar said.
Late Wednesday, Tokopedia said it was considering accelerating its plans to go public as its business growth had increased since the coronavirus pandemic. The company previously said it was considering an initial public offering within three years. The company has hired Morgan Stanley and Citigroup as advisers.
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“[A] SPAC is a potential option that we could consider, but that we have not committed to anything at the moment,“ a Tokopedia spokesman said.
Bridgetown is also in talks with other unicorns – privately-owned companies worth more than US$1 billion – across Southeast Asia about possible investments. It is hunting for fast-growing new economy companies spanning industries such as technology, financial services and media. The targets are also likely to be “national champions”, leaders in their fields that have already laid out a path to profitability.
Founded in 2009, Tokopedia has already raised US$2.9 billion in funds, according to data from Crunchbase, from investors that include Softbank, Post owner Alibaba Group Holding, Google and Singaporean wealth fund Temasek Holdings.
“Southeast Asia is entering a new era of economic growth, particularly in the new economy sectors, which we expect will result in attractive initial business combination opportunities for attractive risk-adjusted returns,” Bridgetown said in a US regulatory filing.
If the discussions with Tokopedia progress, there is unlikely to be any deal before the end of the year, as valuation discussions will be complex and the shareholding structure will take time to work out, the person familiar said.
Bridgetown is one of more than 220 so-called special acquisition vehicles or special purpose acquisition companies (SPACs) that went public this year. The investment vehicles must make an acquisition within two years of their creation, or be forced to return money to investors. The structure is typically used as a “back-door” listing for the acquired company and can be more appealing to some private companies than the traditional initial public offering (IPO) process.
Through December 11, these blank-cheque companies have raised US$71.2 billion globally in IPOs this year, a fivefold increase over 2019, according to data from Refinitiv. The biggest was Pershing Square Tontine Holdings, which raised US$4 billion in July and is backed by Bill Ackman’s Pershing Square Capital Management.
Ernest Fung, Tokopedia’s senior vice-president of strategy and finance, said at a conference last week that Southeast Asian technology companies, including Tokopedia, have been approached by several SPACs about potential transactions.
“From a company perspective, we have to look at the opportunity here. In a fundraising environment, 2020 has been a mixed bag for different companies,” Fung said at MergerMarket’s and ACVJ’s Hong Kong M&A Forum on December 8. “Certain companies have had a high level of difficulty in accessing capital, especially private companies where you’ve seen investors pull back on investments, or be more cautious in making investments. To the extent that companies are in those situations, they are looking at SPACs as potential opportunities to bypass the hunt for financing, go into public markets and gain access to capital.”
Southeast Asia, particularly technology firms in the region, have become a prime target for SPACs, according to deal makers. However, there are only a handful of technology unicorns suitable for potential US listings, they said.
“There will be more and more of these, not just [in] Southeast Asia, but overall in Asia, tapping into that capital pool in the US, raising capital and bringing it back to Southeast Asia to pursue companies,” Ee-ching Tay, JPMorgan Chase’s head of Southeast Asia M&A, said. “It is a very positive development.”
Bloomberg first reported that Bridgetown and Tokopedia were in talks on Tuesday. Bridgetown’s shares jumped 25.7 per cent to close at US$14.76 overnight in the US.
Tokopedia’s latest funding round in October valued the digital marketplace at around US$7.5 billion, according to venture capital databases and media reports.
Hong Kong-based Li, who founded the investment company Pacific Century Group in 1993, has a net worth of US$4.5 billion according to Forbes. He is the younger son of billionaire Li Ka-shing. Thiel has backed new economy companies, including Facebook and PayPal.