GoTo Group has ended talks to raise funds through a US$500 million ($668.5 million) convertible bond issue, abandoning months of negotiations as it focuses its attention on hitting profitability targets.

Having already downscaled its ambitions from US$1 billion, the Jakarta-based company has called off talks with potential investors, according to people familiar with the matter. Companies that GoTo had been in discussions with included BlackRock Inc., private equity firm PAG and the World Bank’s International Finance Corp., the people said.

Early-stage talks with the companies were still active this year, as GoTo lowered the amount it sought amid muted investor interest and reduced funding needs, said the people, who asked not to be identified because the information is private. BlackRock was among investors who passed on the deal, the people said.

The Indonesian ride-hailing and e-commerce provider eventually decided against the debt sale also because it was concerned it would send a conflicting message to investors, the people said. GoTo had told investors its cash and cash equivalents — at 29 trillion rupiah ($2.6 billion) at the end of 2022 — was “sufficient to reach positive operating cash flow without any additional external funding.”

A GoTo spokesperson declined to comment on the fundraising, but said the company has made progress toward profitability. PAG also declined to comment, while BlackRock didn’t respond to a query seeking comment.

The scuppered deal marks an unusual about-face for GoTo, which has largely depended on external investments to fund its money-losing operations.

See also: <a class='gtm_see_also_1_inread' style='text-decoration: underline;' href='/news/transport/maersks-profit-slumps-more-half-global-trade-slows?utm_source=website&utm_medium=article&utm_campaign=ONPAGESEO'>Maersk's profit slumps more than half as global trade slows</a>

After enjoying years of cheap capital, GoTo — and its Southeast Asian internet peers Grab Holdings Ltd. and Sea Ltd. — are balancing the effects of taking on debt in an era of rising interest rates. Grab in March said it prepaid US$600 million in debt ahead of a 2026 maturity, while Sea repurchased about US$800 million of convertible senior notes due 2026.

Like its regional peers, GoTo is trying to convince investors of its profit-making potential after its shares lost more than 70% since its initial public offering in Jakarta last year.

Formed through a merger of ride-hailing provider Gojek and e-commerce firm Tokopedia, the company cut 600 jobs last month, adding to the 1,300 positions it axed in 2022. The company said the reductions helped it lower monthly fixed expenses by about 20% in January and February of this year, and it’s also slashed marketing spending. In February, it brought forward its profitability targets by a year.

See also: <a class='gtm_see_also_2_inread' style='text-decoration: underline;' href='/news/transport/comfortdelgro-spend-6-billion-replace-existing-fleet-evs?utm_source=website&utm_medium=article&utm_campaign=ONPAGESEO'>ComfortDelGro to spend $6 billion to replace existing fleet with EVs</a>

The cost reductions are easing pressure on GoTo’s finances, with its cash now set to last 10-12 quarters, said Nathan Naidu, an analyst at Bloomberg Intelligence. That’s up from five quarters previously, and compares with 17 quarters at Grab and 21 at Sea, according to Naidu.

GoTo’s reduced cash burn means the company has a potential path to be sustainable without the need for external funding, Mark Goodridge, an analyst at Morgan Stanley, said in a March 20 note.

GoTo scraps talks for US$500 mil debt sale to focus on profit

Data is the new oil but is it as dirty?

'Transition credits' could sweeten deal for early retirement of coal-fired power plants: MAS, McKinsey paper

GoTo scraps talks for US$500 mil debt sale to focus on profit

Related News

Highlights

Data is the new oil but is it as dirty?

Related News

UBS upgrades GoTo to 'buy' following Indonesia's social commerce regulatory move

JP Morgan initiates 'overweight' on GoTo with TP of IDR135

GoTo's risk-reward balanced, BoFA initiates 'neutral' with TP of IDR125