Bukalapak’s financial statements for the first quarter of 2022, released last week, showed a surprising turnaround.

The e-commerce major, which made global headlines global headlines Bloomberg Bukalapak Jumps 25% on Debut After Indonesia’s Biggest IPO Read more in August last year as the first Indonesian tech unicorn to list on the domestic stock exchange, was suddenly booking slightly over US$1 billion in net profit. It had ended the last quarter of 2021 with over US$37 million in losses. Revenue grew from US$36 million to US$54.4 million in this period.

If those numbers sound like they don’t add up, that’s because the most significant part of the company’s profits can be chalked up to unrealised gains from an investment Bukalapak made in January—it acquired an 11.49% stake in digital bank Allo Bank. The investment was part of an emergency diversification strategy that the company initiated at the end of last year.

In an extraordinary general meeting of shareholders on 23 December, Bukalapak voted voted Bukalapak Material of Extraordinary General Meeting of Shareholders (EGMS) Read more that about one-third of the US$1.5 billion the company raised in its IPO—a record-breaking amount for an Indonesian listing—would be allocated for new investments. Previously, the entirety of the IPO proceeds was supposed to serve as working capital for the core business and existing subsidiaries.

C2C and B2B

Bukalapak's core businesses are a C2C marketplace and a B2B retail business model that serves small merchants with a physical retail store

Allo Bank, the biggest bet placed after this decision, had a phenomenal rally in the last quarter; and the rising tide of that stock’s value also lifted the tech giant’s boat. Apart from allowing Bukalapak to book a net profit for the quarter, it also reversed the company’s bottomless share price slide.

Buka share price in recovery

  • IDR 1,325 (US$0.091) High point after August 21 IPO
  • IDR 258 (US$0.018) Low point, March 22
  • IDR 382 (US$0.026) Now, May 22

Allo Bank was the most effective but not Bukalapak’s only investment. Since listing on the Indonesia Stock Exchange (IDX), it has backed more than a dozen other companies, including an e-grocer, an automated voice messaging service, and an edtech platform. Bukalapak has also placed money in other investment vehicles, and set up its own new businesses—even overseas. And there’s no sign of stopping now, when it has more firepower for investments.

“Reallocation of IPO proceeds happens sometimes, but reallocation just five months after the IPO is one of a kind,” said John Octavianus, principal advisor at Nilzon Capital, a wealth management firm.

AUTHOR

Nadine Freischlad

Nadine is based in Indonesia. She covers Southeast Asia's super apps, the changing nature of work and employment, and other structural shifts happening as a result of digital disruption.

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