Big deal on Jakarta roadside
How Warburg put money in Go-Jek, Indonesia’s billion-dollar startup
SINGAPORE: Warburg Pincus’ investment in the first billion-dollar Indonesian tech startup began with an American executive noticing green motorcycle helmets on the roads of Jakarta.
Jeffrey Perlman, the buyout firm’s South-East Asia head, had been travelling regularly to the Indonesian capital to oversee the firm’s joint venture with mall operator PT Nirvana Development when he started to see more and more motorbike riders wearing green headgear emblazoned with the Go-Jek logo. He soon set up a meeting with Nadiem Makarim, a co-founder of the on-demand ride provider, and in August last year his firm participated in Go-Jek’s US$550mil financing round.
The path to the Go-Jek investment – the largest-ever funding round for an Indonesian startup – reflects Warburg Pincus’ broader strategy in Asia. After more than two decades of dealmaking in China and India, the US private equity firm, which closed a US$13.4bil global fund in 2015, has turned its attention to South-East Asia with an initial focus on entrepreneurs in Indonesia, Vietnam and Singapore.
“We have seen how the businesses have evolved in China and India, and want to use that experience and knowledge as we see a lot of commonality in the growth of the companies in South-East Asia,” Perlman said in an interview in Singapore last week. “Capital is a commodity these days, which is why it’s so important to be able to demonstrate the value we can bring to entrepreneurs.”
Warburg Pincus has invested more than US$60bil across more than 40 countries, according to its website.
The New York-based firm had few investments in South-East Asia before 2013. Since then, it has embarked on a flurry of activity, and in July it opened a Singapore office to further grow across the region. Warburg now has six investment professionals based in Singapore, with local consultants on the ground in other South-East Asian countries.
With Asia increasingly becoming a big part of the firm’s global strategy, accounting for about 35% of total new investment activity, Perlman said he wanted to apply lessons learned investing in China and India to South-East Asia as the firm starts to expand its attention to Malaysia, Thailand and the Philippines.
Warburg’s investment in Chinese e-commerce operator 58.com illustrates how the firm has used experience in one place to find and execute deals in another, he said.
With the firm invested in the so-called “Craigslist of China,” 58. com further developed its website of jobs and rentals offerings, and in 2013 it listed in New York. Working with the Chinese company gave Warburg the expertise to source its 2012 investment in Quikr India Pvt, which has a similar business model, he said.
In addition, before Warburg Pincus bought a stake in Go-Jek, it invested in Ucar Inc, one of China’s largest chauffeured car services.
Warburg Pincus also saw investment opportunities in the healthcare and energy region, he said.
It favours industries like consumer retail, property, financial technology, according to Perlman, who joined the firm in 2006 in New York before relocating to Asia.
The firm’s first deal in Vietnam was in 2013, when it agreed to invest as much as US$325mil in the country’s biggest shopping mall owner, Vingroup JSC, and its retail property arm.
In November, it formed a hospitality joint venture with Vietnamese fund manager VinaCapital Group Ltd and led a group that agreed to buy ARA Asset Management Ltd in a deal valuing the Singapore company at S$1.78bil (US$1.3bil).
Warburg Pincus, which manages more than US$40bil of assets, closed a US$2bil China fund in 2016, its website shows.
In the world’s second-biggest economy, it has invested in companies including ANE Logistics, sectors in the E-Shang Redwood and ZTO Express Cayman Inc. In India, it owns stakes in companies including Ecom Express, which provides logistics services to local e-commerce firms, as well as property developer Piramal Realty Pvt.
For Warburg Pincus, founded in 1966, logistics will remain a key focus, Perlman said.
The firm has invested across the entire logistics chain, from warehouses to parcel delivery, and sees the sector underpinning growth in all other industries.
Warburg Pincus is also among shortlisted bidders for Singaporebased warehouse owner Global Logistic Properties Ltd, people with knowledge of the matter said last month.
“Logistics isn’t sexy – nobody really likes to talk about it,” said Perlman, who declined to comment on any interest in GLP. “We think it is one of the most attractive sectors.” – Bloomberg