Gores waltzes into the EV SPAC bonanza, but gets originality points for revenue

The blockbuster domestic listing of Indonesian ecommerce group Bukalapak has prompted other start-ups in the country to abandon plans for overseas share offerings in favour of going local, signalling a payday for their foreign backers.

International investor interest in Indonesia’s tech sector has surged, with group’s including Facebook, Microsoft, Tencent, Alibaba, Google and private equity firms KKR and Warburg Pincus piling into local start-ups.

South-east Asia’s biggest economy, Indonesia has the region’s largest crop of unicorns, or privately held start-ups, valued at more than $1bn.

Until Bukalapak’s $1.5bn listing in August, however, none had successfully listed on a stock market, a crucial step in the start-up lifecycle for global investors. 

Now, other Indonesian tech groups are considering the Indonesia Stock Exchange (IDX) as a credible alternative to international initial public offerings. Conglomerate MNC Group, founded by billionaire Hary Tanoesoedibjo, has dropped a plan to list its video-streaming service in the US through a merger with a blank-cheque vehicle this month.

“When you get an exit like that [Bukalapak], it gets the attention of later-stage funds,” said William Bao Bean, general partner at global venture capital fund SOSV. “Not only that it was a successful one and it has fired the starting gun, [but] we should [also] see a funding surge going into the market from international investors.” 

The IDX has sought to attract more tech names though the introduction of regulations to accommodate the sector, such as dual-class shares that would give founders and existing shareholders more control of their companies.

Bukalapak, an online marketplace backed by Microsoft, Chinese billionaire Jack Ma’s fintech company Ant Group and Singapore’s sovereign fund GIC, upsized its IPO from an initial target of $300m to $1.5bn, which made it the country’s biggest-ever stock market listing.

Investor withdrawals were minimal early in the year as SPAC shares soared, but have risen with many blank-check companies trading below their listing price. For much of the summer, high withdrawals contributed to the sector’s malaise. Now, they are helping drive new interest in the sector, along with hair-raising stock moves.  

A number of factors are boosting shares after SPAC deals close, investors say. Large investor withdrawals reduce the number of shares available to trade, also known as a stock’s float. That scarcity means it doesn’t take much to swing the stock. Companies that go public via SPACs are also popular targets for short sellers, who wager on stock-price declines, a trend that can attract day traders hoping to “squeeze” the professionals by bidding up the shares.

Short sellers borrow shares, sell them, then aim to buy them back at lower prices. A low float also makes it challenging for traders to borrow shares. That means it can be relatively easy to force those trying to wager on share-price declines to limit losses by buying, analysts say, adding fuel to rallies. 

Rising trading in options—which give the holder the right to buy a stock at a certain price in the future—is also playing a role. Market makers that sell options often hedge by buying shares of the underlying stock, a force that can help amplify share-price gains. 

IronNet recently issued additional shares to company insiders because the stock had stayed above a certain level for a period of time. Such “earnout” provisions are common in SPAC deals.

Some individuals in recent months piling into stocks popular on social media have claimed they hope to hurt professional short sellers by pushing up share prices. Yet large institutions often benefit on paper from such activity. Hedge-fund giant Bridgewater Associates is an IronNet investor.