April 28, 2016 / 9:13 AM / in 2 years

Indonesian online retailer Bhinneka plans IPO to fund expansion

JAKARTA (Reuters) - Indonesian online retailer PT Bhinneka Mentari Dimensi is planning an initial public offering (IPO) in 2018 to widen its reach, one of its directors said on Thursday, as the e-commerce battleground heats up in Southeast Asia’s biggest economy.

The e-commerce market in the country of 250 million people is ripe with potential but it is fragmented and comes with complex regulatory and logistical barriers.

“Our objective to go public is for scaling,” director Andi Boediman said, adding that the company plans to expand its store network and strengthen its supply chain while investing in technology and marketing.

The company operates online through Bhinneka.com, with customers able to have purchases delivered to their homes or its physical stores, which also serve as retail outlets for the electronic goods specialist.

Bhinneka is in a good position to attract investors, Boediman told reporters on the sidelines of a conference in Jakarta.

“We are an online retailer that is focused and reasonably sizeable,” Boediman said, adding that revenue “at least doubled” last year and that he expects a strong performance in 2016.

Bhinneka decided to pursue an IPO in Indonesia because it can be a dominant player on its home ground, Boediman added. He declined to disclose how much the IPO is expected to raise or the company’s financial figures.

The company’s domestic rivals include SoftBank-backed Tokopedia, Blibli and Indonesian conglomerate Lippo Group’s MatahariMall.com. Lippo is also considering an IPO for its e-commerce business, a director said in February.

The Indonesian market is still growing while being supported by a large consumer base, said David Rimbo, managing partner for transaction advisory services at Ernst & Young in Indonesia.

“I think the timing is right for Indonesian players to actually realize basically decent valuations,” he said.

Editing by David Goodman

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