Jakarta. Indonesian digital services company Gojek and Tokopedia have unveiled on Monday that they had agreed to combine the former's mobile on-demand services and payments platform and the latter's marketplace into GoTo Group, creating a new $18-billion entity that encompasses about two percent of the country's economic output. 

Gojek and Tokopedia would continue operation as stand-alone brands under the GoTo ecosystem alongside a new brand of GoTo Financial, which comprises Gojek's payment system Gopay and other financial services offering. 

The group named Gojek’s Andre Soelistyo as GoTo Group's chief executive officer (CEO), with Tokopedia’s Patrick Cao serving as GoTo Group's president. Kevin Aluwi and William Tanuwijaya would remain as CEOs of Gojek and Tokopedia, respectively. Meanwhile, Andre would also lead GoTo Financial. 

"Today is a truly historic day as we mark the beginning of GoTo and the next phase of growth for Gojek, Tokopedia, and GoTo Financial," Andre said in a statement on Friday. 

According to the company's latest funding rounds — Gojek, priced in 2019 and Tokopedia, in early-2020 — the combined past valuation of the company was $18 billion, making it the largest digital services company in Indonesia.

After the merger, GoTo now has a combined gross transaction value of over $22 billion in 2020, or equal to around 2 percent of Indonesia's $1-trillion gross domestic product (GDP), the group said in the statement. 

Based on historical fundraising rounds for Gojek, priced in 2019, and Tokopedia, priced in early-2020, the combined past valuation of both companies was $18 billion.

The group processed over 1.8 billion transactions between 2 million registered driver-partners, 11 million merchant partners, and over 100 million monthly active users in 2020. 

"Gojek drivers will deliver even more Tokopedia packages, merchant partners of all sizes will benefit from strengthened business solutions, and we will use our combined scale to increase financial inclusion in an emerging region with untapped growth potential," Andre said. 

The group said it would continue to operate in emerging markets where Gojek already operates, including Vietnam, Singapore, Thailand.

For its financial services, the group said it would focus on bringing the service to around 140 million Indonesians who have little or no access to the country’s financial system.

“The establishment of GoTo Group proves that you can believe in an ‘Indonesian dream’ and make it a reality. Our goal has always been to build a company that creates social impact at scale, leveling the playing field for small businesses and giving consumers equal access to goods and services across the country," Tokopedia’s William said.

Gojek's cofounder Kevin Aluwi said the merger was made possible by "a great cultural fit" between Gojek's and Tokopedia's management team. 

"Executing a deal of this size and scale so seamlessly was only possible because we believe in the same goals: a relentless focus on consumers to give them the best experience, supported by the densest and fastest mobile network in the region, alongside the most comprehensive pool of merchants," Kevin said. 

Gojek's and Tokopedia's shareholders welcomed the merger. 

"Having worked closely with each of Andre, Kevin, William, and Patrick over many years, I am super excited that they have come together to shape what is going to be one of the most exciting internet companies of our time," Shailendra Singh, the managing director at Sequoia Capital (India) Singapore, which invests early in both companies.

In this deal, Goldman Sachs was acting as the financial advisor to Gojek and Citi to Tokopedia. Gojek's legal advisers were Davis Polk & Wardwell and Assegaf Hamzah & Partners, while Tokopedia appointed Allen & Overy in the role. 

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