Alibaba agrees to retain stake in GoTo in exchange for cloud service purchase

JAKARTA: Local tech giant GoTo has signed a memorandum of understanding (MoU) with its major shareholder, Chinese e-commerce giant Alibaba, to integrate its cloud infrastructure with the Alibaba Cloud platform over the next five years.

The agreement signed on September 13 will require GoTo to migrate its existing cloud services to the Alibaba platform starting next month.

In return, Alibaba agreed to maintain its current stake in GoTo of 7.37%, equivalent to approximately 88.5 billion shares.

GoTo stressed that the move is aimed at streamlining operations, increasing efficiency and reducing operating costs.

“This partnership marks an important milestone in our journey to create a more inclusive and resilient digital economy in Indonesia,” GoTo Group CEO Patrick Walujo said in a statement on Monday.

“It also underscores our commitment to working with partners to deliver long-term, sustainable growth that benefits our shareholders,” he added.

Since establishing its cloud infrastructure in Indonesia in 2018, Alibaba has built three data centers serving sectors including finance, retail, gaming, transportation, education and logistics.

“We want to support businesses of all sizes in Indonesia and foster innovation that will drive long-term growth,” added Selina Yuan, Vice President of Alibaba Group and President of International Business at Alibaba Cloud Intelligence.

The deal comes after GoTo shares have fallen significantly in value since its initial public offering in April 2022.

By the close of trading on Tuesday, they had fallen 80.8% from an offer price of 338 rupees, or about 0.02 US cents, to just 65 rupees.

During the same period, Alibaba sold about 16.2 billion shares, reducing its stake from 8.84%, which made it the largest outside investor in GoTo, to 7.37%.

GoTo’s largest shareholder is currently Singaporean company SVF GT Subco Pte Ltd, a subsidiary of Japanese technology investor SoftBank.

However, SVF reduced its stake from 8.71% to 7.58% after selling over 12 billion GoTo shares.

This year, GoTo’s three co-founders sold most of their voting shares but retained the remaining shares.

GoTo has taken a number of actions to achieve its goal of achieving positive adjusted earnings before interest, taxes, depreciation and amortization by the end of this year.

Last December, GoTo sold a 75.01% stake in major e-commerce platform Tokopedia for $1.5 billion to ByteDance-owned TikTok.

Following the deal, TikTok merged Tokopedia with its own e-commerce site, TikTok Shop.

According to the disclosure, TikTok would pay GoTo a service fee of approximately 0.4% of the combined entity’s total merchandise sales value on a quarterly basis.

GoTo also closed its operations in Vietnam on Monday due to fierce competition in the passenger and food delivery sectors.

The tech giant said the decision will allow GoTo to focus on operations that can deliver “significant market impact” in a “sustainable manner.” — The Jakarta Post/ANN