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Grab Raises Stake in E-Wallet Ovo to 90%, Buys Out Tokopedia

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(Bloomberg) -- 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.

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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.

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.”

Grab said in July Emtek has invested $375 million into Grab Teknologi Indonesia, while Grab has completed an investment into Emtek without disclosing the amount.

“This transaction has been planned for some time and will allow us to continue to focus on further deepening the market-leading strategy of GoPay and the broader GoTo Financial ecosystem,” GoTo said in a statement.

Ovo is Indonesia’s largest mobile wallet with a 38% market share in the country, according to the Mobile Payments Report 2021 by Boku Inc.

A substantial amount of Ovo’s transaction volume has come through Tokopedia though, a potential risk for the future. GoPay’s backers include Facebook Inc. and PayPal Holdings Inc.

Representatives for Grab declined to comment.

(Updates with valuation and analyst’s comment from the sixth paragraph.)

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