On the evening of June 12, Bloomberg reported, citing people familiar with the matter, that two of Indonesia’s top fintech start-ups, Dana and Ovo, had agreed in principle to merge, and that the combined company would leapfrog Gojek, currently the market’s no.1, in a move. People familiar with the matter said the merger would help the two companies reduce unnecessary spent in the market. The deal has been delayed due to the outbreak of the coronavirus, and the terms and timing remain uncertain and may be subject to variables.
Under the structure of the existing deal, Ant Financial will remain a major shareholder in the combined company, while some of its shares will be partially diluted, another person familiar with the matter said.
Indonesia’s mobile payment market has long been a dominant position. Ovo’s investors include Grab, a Singapore-based ride-sharing company, while Grab is invested by SoftBank, Dana’s investors include Ant Financial and Indonesia’s Emtek Group, and Gojek’s investors include Facebook and PayPal.
If Dana and Ovo merge, the new company’s mobile payment market in Indonesia will overtake Gojek as the market leader.
Whether it’s a combined company or Gojek, payments are an important entry point for users to a range of financial value-added services that are critical to monetize them.
Indonesia has the world’s fourth largest population and a huge market potential, and if Dana and Ovo merge, it will leapfrog Gojek’s GoPay as the largest mobile payment wallet in the region.
According to App Annie, Gojek’s app has been downloaded 170 million times, making it the most used in Indonesia in 2019. Ovo’s application has been installed in 115 million devices. The Indonesian version of Alipay Dana is the fastest-growing financial services app in the region in 2019.
Since Grab and Gojek put billions of dollars in payments and financial services, payment-based digital financial services have become popular in Southeast Asia. More complex areas of digital financial services, such as digital lending and insurance, are still in their infancy.