AirAsia is to acquire Indonesian unicorn Gojek’s business in Thailand as the low-cost Malaysia airline steps up its digital ambitions to become an ASEAN super-app.
Gojek and AirAsia announced an all-share deal on Wednesday. The Indonesian tech group will take a 4.76% stake in AirAsia’s own “super-app” in newly issued shares in exchange for its Thai business.
AirAsia’s super-app business is worth around $1 billion. While Gojek’s Thai business values at $50 million, AirAsia said in a stock exchange filing.
The agreement shows how AirAsia is trying to join the ranks of Southeast Asia’s super-apps alongside Gojek and Grab, with a business spanning ride-hailing and delivery to online payments.
“By taking on Gojek’s well-established Thai business, we’ll be able to turbocharge our ambitions in this space to become a leading ASEAN challenger super-app,” said Tony Fernandes, the Group CEO of AirAsia.
Gojek’s app in Thailand will run until the end of July. AirAsia hopes to have its super-app up and running in August. Fernandes added in an online news conference on Wednesday that there will be no redundancies arising from the transition.
The deal shows how Gojek is reshaping its regional business. This restructuring comes in the wake of its announcement in May that it would merge with Tokopedia, one of Indonesia’s largest e-commerce platforms, to form GoTo. GoTo is set to become Indonesia’s native Super-App.
The deal would allow Gojek to increase investments in Vietnam and Singapore, the companies said.
Expect more AirAsia, GoTo tie-ups
Kevin Aluwi, CEO of Gojek, said that talks between the companies began around two months ago. These talks occurred during an online news conference.
“When we look at where we could deploy our product and engineering resources, not just capital … we decided that our priority was to invest in Singapore and Vietnam,” Aluwi said, “just because of the scale of business we have in those markets.”
He added that the company could find “a path to market leadership” in the two countries.
“When we realised that we couldn’t properly commit the right resources to Thailand,” Aluwi said, “we ensured we could find the right partner with the commitment and resources.
“But we remain as committed as ever to growing our markets outside of Indonesia.”
Both Fernandes and Aluwi alluded to the possibility of doing further business together outside Thailand. However, they both did not disclose any details.
Fernandes has previously publicly stated his intention to compete with Gojek and Grab. Grab, its Singapore-based super-app rival is headed for a U.S. stock market listing this year.
AirAsia Digital, including the company’s non-airline businesses, already includes food and fresh food delivery, courier services, an e-commerce platform and a payment gateway. However, it has lacked ride-hailing compared with the other prominent players in the market.
AirAsia has been present in Thailand’s aviation industry since 2003 via Thai AirAsia. Its stand-alone cargo company Teleport is present in major countries in Southeast Asia, including Thailand.
Above all, GoTo lags behind its rivals in international expansion. Tokopedia only operates in Indonesia. Gojek has operations in three countries outside of its home market, namely, Vietnam, Thailand and Singapore.
Grab operates in eight Southeast Asian countries. Sea, another super-app, is in six countries in the region, with further operations in Taiwan and four South American countries.
Potential Thai Super-App battle?
The Thai super-app market is seen as particularly competitive given how local conglomerates have taken part. Retail giant Central Group invested $200 million in Grab’s Thai subsidiary in 2019. Thailand’s largest conglomerate, Charoen Pokphand Group, is working to nurture its telecom subsidiary’s TrueID content app into a more powerful super-app.
According to food delivery research by Singaporean consultancy Momentum Works, Gojek’s service had a far smaller share of the Thai and Vietnam markets compared to Grab and Sea in 2020.
GrabFood took up 50% of Thailand’s $2.8 billion food delivery market in 2020 regarding gross merchandise value. Frankfurt-listed Delivery Hero Group’s Foodpanda and Line’s Lineman covered 23% and 20%, respectively. Gojek’s GoFood had a 7% share in the market.
Thailand’s internet economy was valued at $18 billion in 2020, according to a report by Google, Temasek and Bain & Company, the second biggest in the region behind Indonesia. In conclusion, it expects to grow to $53 billion in 2025.