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Commentary: Why Seize, Gojek, Tokopedia and Sea are the brand new darlings of US markets

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SINGAPORE: If all the pieces goes to plan, Seize will quickly increase round US$four billion in financing within the largest ever SPAC (Particular Objective Acquisition Firm) itemizing, giving Anthony Tan, the corporate’s founder, a spot within the historical past books, simply as he wished.

The itemizing values Seize at US$40 billion. The trip hailing-to-food supply large is a dominant pressure and a family identify in Southeast Asia. It’s speak of the city on Wall Avenue.

Although it’s value noting that the valuations are eye-popping and the questions are increasing concerning the viability of SPACs.

Jim Cramer, the host of the well-known CNBC present, Mad Cash, solid a powerful dose of warning on SPACs and investments in tech firms usually. However he’s speaking up the Seize deal. “I don’t like the value proper now, however in the event you look forward to some weak point … you’ve bought my permission to do some shopping for,” he mentioned final week.

READ: Commentary: Why Seize is in such a rush to get listed

The truth that Seize’s acquirer, Altimeter, has pledged a 3 yr lock up on its shares additionally exhibits a wholesome dollop of confidence.

Not too way back, American traders had been clamouring to get their arms on something to do with China and Chinese language firms had been flocking to US fairness markets to capitalise on the passion. 

The depth and class of the US market continues to be unrivalled, regardless of the rise of its Shanghai equal. However consideration is now turning to Southeast Asia in an enormous manner.


That comes as little shock in some methods. 

With a inhabitants nearing 700 million, the scale of the market is huge. It’s half that of China, however shoppers are digital natives and younger. Wanting simply at Indonesia, the median age is 30.2 years outdated.

Digital consumption, or these buying a services or products on-line, is rising quickly. Bain and Co beforehand forecast that the variety of digital shoppers in Southeast Asia would attain 310 million by 2025. 

China has plans to help its legions of pensioners keep up with a fast-developing digital economy
China has plans to assist its legions of pensioners sustain with a fast-developing digital financial system. (Photograph: AFP/NOEL CELIS)

It reached that quantity final yr, 5 years early. To place that in context, these 310 million digital shoppers signify about half of Southeast Asia’s inhabitants. 40 million folks within the area got here on-line for the primary time final yr.

Seize, Gojek, SEA Group (Shopee) and Lazada are all plugging into this development with trip hailing, on-line procuring and supply and more and more moving into different areas like banking and insurance coverage. Shopee was the third most downloaded app globally within the procuring class in 2020.

In fact, the markets in Southeast Asia may be very totally different. Generally, there may be market dominance in sure nations and sectors, as homegrown gamers like Gojek could obtain in Indonesia.  

But what’s extra exceptional is what number of of those new huge techs have demonstrated a capability to carry out properly in most of the disparate markets in Southeast Asia, in a manner that creates a pure barrier to entry to different new challengers.

Southeast Asia’s on-line retail market now accounts for five per cent of its whole, but it surely’s on a fast tear. E-commerce gross merchandise worth grew 23 per cent per yr from 2018 to 2020, quicker than the compounded annual progress charge of China’s, India’s, and the US’ GMV throughout the identical interval, in response to Bain. 

READ: Commentary: China’s tech firms were supposed to help achieve the Chinese Dream

The truth that Seize desires to remain centered on this “large” ASEAN progress story, quite than unfold out even additional, is saying one thing.


In distinction, Chinese language firms listed on US markets now signify larger dangers for traders. As US-China geopolitical rivalry heats up, damp sentiment is weighing on Chinese language companies itemizing within the US. There’s a rise of Chinese language companies itemizing on the US markets thus far this yr however geopolitical issues are inflicting lacklustre debuts.

FILE PHOTO: Chinese electric vehicle start-up Nio Inc. vehicles are on display in front of the NYSE
FILE PHOTO: Chinese language electrical car start-up Nio Inc. automobiles are on show in entrance of the New York Inventory Trade (NYSE) to have fun the corporate’s preliminary public providing (IPO) in New York, U.S., September 12, 2018. REUTERS/Brendan McDermid/File Photograph

Simply as Seize was on the brink of obtain billions in its SPAC itemizing, Alibaba was hit with a report antitrust superb of US$2.eight billion for what the state referred to as abusing its market dominance. The more and more assertive stance of the Chinese language authorities in direction of tech gamers is a part of an enormous shift within the regulation of China’s digital house.

Curiously the Gojeks and Grabs of the world have been notably good at staying on the appropriate sides of governments as regulators play meet up with their outsized progress.

Seize began out by tapping into the present fleet of taxis, serving to clients to “simply Seize” any taxi out there, quite than name totally different firms. Now it gives a collection of providers, together with private-hire vehicles. This was a starkly totally different method to Uber, which went head-to-head with taxi firms, sparking societal issues and lawsuits.

READ: Commentary: US proposed international minimal company tax has implications for Singapore

For Gojek, the pivotal resolution to initially think about ojeks (motorbike taxis), for instance, was doubly context-savvy: It skirted direct competitors with Jakarta’s current taxi trade, whereas dodging the nation’s transport rules, which utilized solely to four-wheeled automobiles.

By the point the app launched four-wheelers in 2016, Gojek had already cultivated a public profile as a boon to the native financial system and a patriotic image of Indonesian progress.


For all its benefit, Southeast Asia is advanced. Transport infrastructure is usually laborious to barter and providers troublesome to ship, particularly in Indonesia. 

Apps like Gojek have helped riders enormously by opening up a buyer base to optimise the place they find themselves and supplied them different supply jobs when trip demand is low through the day.

FILE PHOTO: Gojek driver helmets are seen during Go-Food festival in Jakarta
FILE PHOTO: Gojek driver helmets are seen throughout Go-Meals competition in Jakarta, Indonesia, Oct 27, 2018. (Photograph: REUTERS/Beawiharta)

The method of the tremendous apps additionally differs extensively from the Amazons and Ubers of the world, which think about just a few providers and do them very well. 

A giant inhabitants of prepared servers helps Seize and Gojek add extra providers and unfold them out over a wider space. A deep and native understanding of Southeast Asian nuances helps.

As a substitute of moving into these segments itself, it’s fascinating that Amazon is investing huge in cloud computing to help rising tech growth in Southeast Asia quite than attempt to eat Lazada or Gojek’s lunch.

There are cultural nuances too. Shopee is capturing eyeballs with cut price searching and flash offers. Such social commerce (group and gamified shopping for) is the subsequent frontier in e-commerce.

READ: Commentary: What’s behind Seize’s reported SPAC itemizing

There are two primary causes for the rising curiosity in social commerce. 

The primary is that persons are rising weary of massive tech’s advertising-driven method to e-commerce. For instance, customers are rising uninterested in being bombarded by advertisements and influencers telling them what to purchase. 

Second is that privateness issues are weighing on shoppers’ and legislators’ minds.  The extra customer-driven group shopping for fashions keep away from this method.

The tremendous apps are additionally backed by big investments of US and Chinese language cash, the traders content material to duke it out by way of their proxies quite than compete instantly.

Shopee 2.2 CNY Sale
The Shopee 2.2 CNY Sale gives offers and reductions. (Photograph: Shopee) 

Different tech unicorns within the area, resembling Traveloka and Property Guru are additionally contemplating itemizing by way of blank-cheque SPACs within the US and Gojek is consolidating its place by merging with Tokopedia, which can make it a transport and e-commerce large.

The competitors is heating up and it seems to be like we’re simply in the beginning. 

As my colleague, Guoli Chen, Technique Professor at INSEAD has identified earlier than, one main purpose for Seize’s itemizing is its want for added capital to keep up its main place in trip hailing, meals supply and digital finance, to defend itself from incursions by Sea, the most important tech agency in Southeast Asia.

READ: Commentary: Deliveroo’s IPO is a lesson to not underestimate traders

Lastly, these listings could profit the entrepreneurial ecosystem extra broadly. Main liquidity occasions, just like the Seize itemizing, can even allow exits for personal traders, which usually unlock capital to begin different firms and make different investments.

Jason Davis is an Affiliate Professor of Entrepreneurship and Household Enterprise at INSEAD.

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