GoTo or Gojek Tokopedia plans to sell convertible bonds for above $1bn. However, a Singapore-based ECM banker argued that so far there has been little interest, the deal might go well with a hefty discount. From the loss-making and cash-buring, the company could raise around Rp15.8trn from its domestic IPO at Rp338 per share. The firm planned to sell above 10% of its capital in a US IPO by the end of this year as well. Bankers argued that the company choose the secondary share sale completion before it sells the primary shares.
Local ECM banker added that the firm’s pre-IPO investor sell-off might need to take another way before the shar price is decided. In order to improve liquidity they need to get more shares from the foreign investors. Thus, it could help the company to get better terms for the CB. Bankers argued that the preliminary feedback from investors for the CB is not positive. Thus, the company might be in the situation of raising a smaller amount or $500m. In addition, an equity-linked banker argued that the company required timing for the two deals. Sometimes, they would require a sell-down to go first before CB launch.
This is because the CB investors tend not to buy if they know a sell down is happening. As a result, it might drag down the share price. The banker added that theoretically, CB can launch before the sell down by resetting the conversion price. However the valuation assumption would be tricky because the issuer might not get the deep cut in the valuation regarding the potential sell down. Thus, maybe launching the convertible bonds and the sell down simultaneously could be one of the solutions.