Grab to lead $100 million investment in Indonesian e-wallet LinkAja, beating Go-Jek

Grab to lead $100 million investment in Indonesian e-wallet LinkAja, beating Go-Jek

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In a battle between two giants of ride-hailing and payments, Grab beat out Go-Jek to lead a $100 million fundraising round for the Indonesian government-backed e-wallet provider LinkAja.

The funding round was a Series B investment into LinkAja and symbolizes a massive battle occurring in Indonesia, with several tech giants working behind the scenes to become the dominant mobile wallet in the country. Joining Grab in the investment were the domestic wireless carrier Telkomsel, BRI Ventures, the venture arm of state bank BRI, and Mandiri Capital Indonesia. Telkomsel is a unit of Telkom Indonesia which is a publicly traded company that is majority-owned by the Indonesian government. The funds will be used to accelerate LinkAja’s growth to sign-up more middle class and “aspiring to middle class” consumers and small to medium-sized enterprises for acceptance.

Go-Jek had been competing with Grab for a primary investment position in LinkAja as part of the ongoing battle for mobile wallet dominance in Indonesia, according to media outlet KR-Asia. By winning the primary investment, Grab is in a more competitive position against Go-Jek’s GoPay wallet.

LInkAja launched its operations in June 2019 as a result of several state-owned enterprises pooling their resources. LinkAja claims that in the past year it has signed more than 58 million registered users, with more than 80% of its users coming from tier 2 and 3 cities in Indonesia.

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In August, LinkAja was one of the key expansion partners for Remitly expanding its remittance network from 160 million e-wallet users to 300 million to meet demand for digital money transfers being fueled by a COVID-19-influenced trend to move away from physical cash and into mobile wallets.

LinkAja competes in a very crowded mobile wallet market that has roughly 37 different local wallets. According to Daily Social Indonesia, LinkAja is the fourth most-used wallet after Go-Jek’s GoPay, Softbank and Grab-backed OVO and Ant Group-backed DANA. According to Reuters, Grab is in talks with Ant to merge OVO and DANA in a competitive bid to outflank Go-Jek in the highly competitive and rapidly growing online commerce channel.

Grab, which started as a college project to take on Uber, has morphed into a multi-billion ride hailing, food delivery and payments firm across Southeast Asia and is colloquially known as a “super app” because of the variety of features it offers. Grab has received massive investments from Japanese banks, Softbank, $1 billion from Toyota, and with a potential to receive an additional $3 billion from Alibaba.

The talks sit as backdrop as billionaire Jack Ma seeks to take Ant Group public in a $35 billion IPO which is destined to be the world’s largest. Most recently, the Ant Group IPO was delayed as Shanghai and Hong Kong stock exchanges put brakes on the deal due to significant changes in the Chinese regulatory environment.

Other tech giants have recently flooded the Indonesian mobile wallet market with new investments. In June, Facebook and PayPal both invested in Go-Jek according to Reuters. The investment gives Facebook a 2.4% percent stake in Go-Jek’s GoPay fintech arm, while PayPal owns 0.6% of GoPay. Alphabet’s Google invested in Go-Jek in a 2018 $1.2 billion fund raising round that also included Singapore’s sovereign wealth fund, Temasek Holdings.

Go-Jek’s GoPay is accepted by over 420,000 online and offline merchants in over 370 Indonesian cities, of which over 90% are small businesses. In April, Go-Jek acquired a local mobile point of sales startup called Moka Pay for $130 million, giving it a boost in mobile payments for food deliveries.

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