Big-name investors KKR & Co. and Warburg Pincus LLC are taking the “Uber bet” to a new extreme as they consider an investment in an Indonesian motorcycle-hailing app that would value the startup at more than $1 billion.
The private-equity firms are in discussions to participate in a fundraising round for PT Go-Jek that could raise around $400 million and value the Indonesian ride-hailing company at about $1.2 billion including the fresh funds, according to people familiar with the matter. Go-Jek, named after the motorcycle taxis, or ojeks, that customers can order through its app, is courting new and existing investors for the fundraising effort.
Go-Jek offers cheap, on-demand motorcycle taxis that can be booked through smartphones. The company offers fixed prices and pickups, meaning passengers don’t need to haggle over prices at motorbike stands. It has also expanded its offerings into on-demand grocery shopping, delivery services, masseuses and beauticians, and has also ventured into offering cars and minivans.
If successful, Go-Jek’s fundraising round would elevate it into the small club of Southeast Asian startups valued at more than $1 billion. Beyond its larger competitor Grab, others billion-dollar startups include online game and messaging business Garena Interactive Holding Ltd.—valued at about $3.75 billion in a March funding round—and e-commerce company Lazada Group. In April, China’s Alibaba Group Holding Ltd. agreed to pay $1 billion for a majority stake in Lazada.
Heavy gridlock on the streets of Indonesia, Southeast Asia’s most populous country and its largest economy, makes motorbike services a popular ride-hailing option for customers looking to cut through traffic. The country’s ratio of motorbikes and scooters to cars was 10 to one in 2014, according to the Indonesian Automotive Industry Association.
Indonesia is home to a population of more than 250 million people. About 30 million of those people live in Jakarta, the capital.
The company spent $73 million between October 2015 and March 2016 to grow its business, leaving it with just over $100 million in the bank as of March, according to an investor presentation viewed by The Wall Street Journal. That cash spent resulted in a 12% growth in passengers for its service over that period as the company cut driver subsidies and reduced fare prices, the presentation said.
Go-Jek completed an average of about 340,000 bookings a day in January 2016, according to the investor presentation. Rides aren’t expensive: The average fare for Go-Jek was just $3 over the 12-month period through January 2016, the presentation said.
Jakarta-based Go-Jek’s existing investors include DST Global, run by Russian billionaire Yuri Milner, who made his name with early bets on Facebook Inc. and Twitter Inc. Others include venture-capital firm Sequoia Capital and NSI Ventures, a unit of Northstar Group, the Southeast Asian private-equity firm whose backers include U.S. buyout giant TPG Capital.
Other similar businesses in Indonesia include LadyJek, which specializes in female drivers for women who don’t want to sit behind a male stranger. Another is Ojek Syar’i, whose drivers are all Muslim women. Most services offer rain gear for wet days and insurance coverage in case of accidents.