On the morning of 8 November, Indonesian e-commerce firm Blibli began trading on the Indonesia Stock Exchange (IDX) under the ticker BELI. The firm had raised US$510 million by selling 17.8 billion shares at IDR 450 (US$0.03) each in its initial public offering (IPO) at a roughly US$3.4-billion valuation.
Unlike the previous two tech listings in Indonesia, Blibli opened its first trading day with a short, simple ceremony alongside five other companies from various sectors. E-commerce company Bukalapak, the first tech unicorn to go public in August 2021 and tech giant GoTo, which followed in April 2022, had individual, festive ceremonies before trading began.
Considering how poorly those two stocks have fared—Bukalapak is down 73% from its IPO price, GoTo is down 47%—Blibli’s toned-down ceremony was no surprise.
With the appetite for tech stocks significantly cooling off and an uncertain economic outlook, there were good reasons to anticipate muted demand for Blibli and a share-price decline in the coming weeks.
Some analysts are pessimistic about Blibli’s outlook, pointing out its burn rate and the relatively small chunk of the IPO proceeds—just 28%—the tech company intends to reserve to fund its operations. By most estimates, it would take the loss-making firm just six months to run out of cash.
“Thus, by the first half of 2023, Blibli needs to either cut costs, raise more debt/equity, divest its investment portfolio, or do a combination of all these measures,” said Frizon Putra, principal advisor at investment firm Nilzon Capital.
Yet, against all headwinds, Blibli did well on its first day. Shares went up almost 5% in the first few minutes and were hovering near IDR 454 (US$0.03) at mid-day, just slightly above the IPO price.
There are a few things that make Blibli stand out from its peers and may have helped drum up enthusiasm from Indonesian investors.
First, its valuation seems more reasonable than those of its peers. Second, its tight relationship with the Djarum Group, which is owned by Indonesia’s richest family. Blibli’s growth since inception has been funded almost entirely through Djarum, not outside venture capital. This means the company will likely still be able to access funds—as long as it has buy-in from the group.
Running out of runway
In the near term, Blibli needs to address its runway problem.
The roughly IDR 8 trillion (US$510 million) raised by the company makes it one of the largest listings in the Indonesian history. But in the IPO prospectus, Blibli said it intends to utilise IDR 5.5 trillion (~US$352 million), or 69% of that money to pay back bank debt.
Only IDR 2.3 trillion (US$144 million) will flow towards funding operations. But because those operations are loss-making, the funds will quickly be depleted.
“In the first half of 2022, Blibli’s Ebitda was negative IDR 2.3 trillion (US$147 million) with a remaining cash balance of IDR 2 trillion (US$126 million).