China’s Tencent, the parent company of popular messaging app WeChat, has led a new round of investment in Indonesia-based on-demand transportation service Go-Jek totaling $1.2 billion, according to a report in TechCrunch citing unidentified sources.
According to the report, the new round was sealed last week and is set for public announcement soon. This latest round of investment will give the company a new valuation of about $3 billion, according to TechCrunch.
Go-Jek has become one of the most important ride-hailing services in Indonesia, vying for dominance in the market with Singapore’s Grab and US-based Uber. While the company has not yet offered its services in other markets in Southeast Asia, it’s possible that the new infusion of cash from Tencent will help it down that path.
Go-Jek first gained prominence by melding the concept of on-demand transportation facilitated by smartphones with the “ojek,” as motorbike taxis that can easily navigate gridlocked urban traffic are known in Indonesia. But it has expanded into providing rides in automobiles, along with a suite of services that includes grocery and food delivery, as well as digital bill payments.
The platform could very well serve as the gateway to a host of digital services for a newly emerging consumer class that is also just coming online—largely via smartphones. eMarketer estimates that the number of smartphone users in Indonesia will grow from 67.1 million this year to 92.1 million by 2020.
These new smartphone—and often internet—users may first sign up for Go-Jek’s ride-hailing service, but then find utility in its other offerings, such as digital payment service Go-Pay.
According to research firm JakPat, Go-Pay has already gained some traction among users of “digital cash,” which was defined as any digital, prepaid or reloadable payment method. The firm’s December survey revealed Go-Pay was used by 27.1% of mobile internet users in Indonesia who had used some form of digital cash.
Meanwhile, Tencent’s investment gives it entry into at least one market in Southeast Asia, a region that is expected to draw increasing attention from China-based firms that offer various online services and are looking to expand into new markets.
Tencent may have been caught flatfooted by the aggressive moves by Alibaba-affiliated company Ant Financial. The operator of digital payment service Alipay has invested in or partnered with a range of companies in Southeast Asia, South Korea’s Kakao Pay and Philippines-based financial technology firm Mynt.
The report also came amidst whisperings that Chinese ecommerce firm JD.com was currently in the midst of talks to invest in Indonesian online marketplace Tokopedia.