Grab raises its stake in Indonesia’s Ovo to 90%

Grab Holdings Inc is boosting its ownership of the Indonesian mobile wallet provider Ovo to about 90% by acquiring stakes from PT Tokopedia and Lippo Group.

Singapore-based Grab, which plans to go public via a merger with Altimeter Growth Corp by the end of this year, increased its holding in PT Bumi Cakrawala Perkasa, Ovo’s parent, from about 39%, according to a filing with the Ministry of Legal Affairs.

Grab has been expanding beyond ride-hailing into financial services and originally invested in Ovo as part of that effort.

Ovo is Indonesia’s largest mobile wallet with a 38% market share.

The fate of Ovo has been thrown into question however because the e-commerce platform Tokopedia merged with Gojek, a ride-hailing company that is Grab’s primary competition in the region.

The combined GoTo, an internet giant in Indonesia, held a stake in Ovo alongside Grab, as the companies vied for leadership in Southeast Asia.

Ovo and Gojek’s GoPay had also competed fiercely in the past.

By buying out Tokopedia and Lippo, Grab can resolve those conflicts and focus on boosting its financial services in the region.

“We are pleased to complete the first part of a wider exercise to restructure our ownership,” Ovo said in a statement. “We welcome a greater commitment from Grab in Ovo. We’re working in close consultation with the regulators to complete the ownership restructuring process, and are confident this will allow us to better serve the financial services needs of Indonesians.”

Ovo is valued at about $2 billion, making Grab’s purchase worth between $500 million and $1 billion, according to a person familiar with the matter who asked not to be named discussing a private deal.

Grab is in the process of selling a slice of its Ovo stake to Indonesian investors to comply with the country’s regulations, according to another person with knowledge of the matter.

“It’s not surprising since Tokopedia needs to sell for regulatory reasons,” said Angus Mackintosh, founder of CrossASEAN Research.

“PT Elang Mahkota Teknologi, better known as Emtek, is likely to come in to acquire a stake from its strategic partner Grab,’’ he said. “Grab may lose some business as Tokopedia switches to GoPay, but likely to gain elsewhere.”