When a new but well-financed overseas company decides to expand its business in new territories, then it has to contend with local competition, and there are various ways in which one can counter it. One of those is a strategic merger, and it seems Singaporean tech firm, Grab is going to do exactly that in order to bring its payments business in Indonesia on a somewhat even keel with the dominant force in the market, Gojek. In a new development, it has emerged that Grab, which is backed by Softbank, is currently in discussion with a local payments company to complete a merger with its Indonesian payments company, OVO. The local company in question is DANA, backed by Ant Financial and it is being done in order to build more strength to its Indonesian operations.
Sources which are close to the developments stated that Grab is going to acquire a majority stake in DANA from Elang Mahkota Teknologi, which is the ultimate owner. Elang Mahkota Teknologi is one of the biggest media companies in Indonesia, and DANA is its flagship payments business. The payments industry in Indonesia has grown at a breakneck pace over the course of the past few years and is currently valued at billions of dollars. Gojek remains the market leader, with OVO being the second and DANA being at third place. However, if OVO and DANA do manage to thrash out a merger, then it the new entity could prove to be big enough to snatch the first position from Gojek.
That being said, Gojek is no pushover by any stretch, and it would take a lot more than mere merger to topple its stranglehold on the payments market in Indonesia. Gojek is currently valued at $10 billion, while Grab is valued at $14 billion, and currently, they are the two most valuable startups in the region of South Asia. However, when it comes to such large companies, the competition can be intense, and it is believed that the two companies are going to battle it out in the payments space in the foreseeable future. However, the acquisition of DANA by OVO is not going to come cheap either, and according to sources, OVO has put the value at $2.9 billion. DANA has stated that it does not respond to speculation and refuses to make a comment.