Merger And Acquisition Trends Among Start-up Companies In 2023

Nusantara Legal Partnership


NLP is a boutique law firm located in Jakarta, Indonesia. Our firm concentrating on; (a) General Corporate, (b) Employment, (c) Foreign Direct Investment (FDI), (d) Commercial Litigation, (e) Pharmaceutical, (f) Merger and Acquisition, (g) Insurance, and (h) Information Technology. Our firm is composed of highly skilled lawyers with exceptional analytic skills and proven experiences in the legal sphere with the ability to cater clients’ needs of comprehensive legal solution. We possess the required experiences and rich knowledge in our respective practice areas. We are committed to advocate our clients' cause earnestly and supporting their outcomes.
Players of Indonesia's digital economy have been trying to maintain resilience amidst the challenges of tech winter over the past two years.
Indonesia Corporate/Commercial Law
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Players of Indonesia's digital economy have been trying to maintain resilience amidst the challenges of tech winter over the past two years. This situation has set the trend that startup founders and (both institutional and individual) investors need to depart from ownership in technology companies in Indonesia. Many major players are also seeking to enter into new partnerships with larger competitors in order to navigate the increasingly competitive market in the digital economy.

Such trend has proven to affect M&A activities within Indonesia's technology companies throughout 2023. At least 17 startup companies have undergone M&A transactions, contributing the largest transaction value during the period, amounting to USD1,760,670,000.

Please find below, the compilation of M&A deals concluded in various technology companies in Indonesia during 2023:

I. M&A Deals of Startups in 2023



II. Commentary on the Recent Start-up M&A Deals

The data above indicates that at least 14 start-up companies were acquired by foreign and local investors, with a total estimated transaction value reaching USD1,760,670,000. This figure is remarkably significant, contributing almost 50% of the total investment in start-up companies throughout 2023, amounting to USD4,060,818,000.

We also observed that some major Indonesian conglomerate companies, including, among others, PT Astra International ("Astra Group") operating in the automotive sector, are increasingly interested in acquiring stakes in startups and technology companies. Astra Group has recently acquired one of the biggest marketplace platforms, OLX Indonesia. Although the exact transaction amount has not been publicly disclosed, Astra Group now holds the majority 99.98% control over OLX Indonesia via its subsidiary PT Astra Digital Mobil, while the remaining 0.02% stake is held by PT Astra Digital International.

One of the most prominent transactions was the acquisition of Tokopedia by the giant video platform Tiktok or ByteDance, which was concluded late in 2023. We note that Tiktok has officially acquired 75.01% of shares, which is equal to USD1.5 billion. The acquisition occurred after TikTok Shop temporarily ceased its operations in Indonesia due to the enactment of Ministry of Trade Regulation No. 31 of 2023 on Business Licensing, Advertising, Development, And Supervision Of Business Players In Electronic Commerce ("MoTR 31/2023"). MoTR 31/2023 prohibits social commerce operators, such as Tiktok, from facilitating payment transactions in its electronic system. In order to comply with MoTR31/2023, Tiktok decided to cooperate with Tokopedia through an acquisition. Post-acquisition, TikTok's role has been focused on product promotion, while the process of transactions are conducted through the electronic system operated by Tokopedia.

Indonesia, as the most populous nation in Southeast Asia, will remain an attractive hotspot for major technology companies. Opportunities for investors to acquire Indonesian technology companies are projected to increase in 2024. With the increasingly competitive market, many business players are considering merging with their foreign competitors or opening partnership with other big players. With the conclusion of the 2024 general election, we will likely see more M&A activities the rest of the year.

Although this development is prospectively interesting, M&A activities involving technology companies in Indonesia will result in regulatory challenges, such as breach of anti-monopoly law, or other coherent issues on, among others, consumer protection.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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