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South-east Asia’s largest ride-hailing company Grab has bought Indonesian online payment start-up, Kudo, as the company kicks off a battle with rivals Uber and Go-Jek for market share with the first investment of a US$700 million (S$978 million) pledge in its largest market over the next four years.
Grab did not disclose the value of the deal announced yesterday, but Reuters put the figure at over US$100 million.
In a statement, Grab said the acquisition “solidifies (its) leadership in digital payments” with Kudo’s team and platform being integrated with its online mobile payment service, GrabPay.
Founded in 2014, Kudo allows less tech-savvy consumers and those without bank accounts to shop online and pay for bills such as utilities and phone credits through its network of “agents”, who help to make those payments to merchants and suppliers on their behalf.
It currently has 400,000 “agents” in 500 towns and cities across Indonesia.
Combining Kudo’s presence in smaller cities and rural areas through these agents, GrabPay’s customer base will provide “millions of people across Indonesia with increased access to convenient cashless payments and new income opportunities, while also unlocking compelling new ways to boost online spending”, Grab’s president Ming Maa said.
Grab said it plans to support and accelerate the expansion of Kudo’s network of agents while leveraging on its reach to bring in more riders, drivers and GrabPay users onto the Grab platform.
Kudo also plans to explore opportunities to grow its financial services offering, including insurance and consumer loans. Its chief executive, Mr Albert Lucius, a former analyst at Goldman Sachs and product engineer at Apple, said in the same statement that the acquisition “creates immediate synergies with our existing business”.
“We are excited to work together to bring the ease and convenience of cashless payments to more Indonesians than ever before,” he added.
SPH Media Fund, the corporate venture capital arm of Singapore Press Holdings, was among the investors who sold their stake in Kudo. SPH Media Fund first invested in the Indonesia-based e-commerce platform in April 2015 and participated in another funding round in December 2015.
Singapore-based Grab offers car and motorcycle ride-hailing services in South-east Asian countries such as Singapore, Indonesia, the Philippines, Malaysia, Thailand and Vietnam. Go-Jek is a market leader in motorbike taxi services in Indonesia. Uber remains a small player, introducing motorcycle-taxi services only in April last year.
Transport analysts in Jakarta told The Straits Times the acquisition illustrates how ride-hailing providers were extending their businesses beyond transportation.
The rivalry has been particularly intense between Go-Jek and Grab.
Since its launch in 2015, Go-Jek has been setting itself apart from its two other rivals by diversifying into various services, allowing its customers to buy food and groceries, hire beauticians and masseusses, and book cleaners.
Mr Yoga Adiwinarto, a director at the Institute of Transportation and Development Policy, said: “Grab doesn’t want to lose out. But since building an e-payment system takes time, the easiest way is to buy a company that has already established itself in this area.”
“After this, I’m sure there will be huge innovations and Grab will expand into service sectors such as mini-markets and the selling of train tickets and flights too,” he added.
Dr Ellen Tangkudung, lecturer at the University of Indonesia, noted that customers would only stand to gain from the competition.
