J&T IPO, Its “Home Base” in Indonesia Is on Fire

Consumer Discretionary Author: EqualOcean News Oct 27, 2023 11:06 AM (GMT+8)

Recently, based on the listing prospectus of J&T(极兔), Frank Hutapea, an Indonesian lawyer, pointed out that the shareholding structure of J&T may violate the relevant local regulations in Indonesia.


Since the submission of the prospectus of J&T, the domestic wind is still calm. But in Indonesia, the "home base" of J&T, a public opinion storm is fermenting.

On October 24, local time, Frank Hutapea, a lawyer at Hotman Paris & Partner, questioned the legality of the listing of J&T Global Express Ltd. Frank claimed that, according to the prospectus, J&T Global Express Ltd does not hold shares in Indonesia, i.e., it does not hold shares in PT Global Jet Express or J&T's parent company operating in Indonesia.

Although J&T stated in its prospectus that through a related regulation or agreement, it could control J&T without owning shares, Frank cited the relevant local investment law regulation, which states that a business entity may not enter into a business agreement under the guise of another person's identity. The Indonesian government has categorized the logistics industry as one of its strategic sectors, and requires that no more than 49% of a company's shares be held by foreign investors. Frank argued that according to this regulation and the ban on "nominee holders", J&T should have been able to hold a stake in the Indonesian company.

The incident is not the only dilemma J&T faced in Indonesia. On September 27, Indonesia's Ministry of Trade announced that social platforms, including TikTok, would not be allowed to engage in e-commerce services, and gave only one week to them to make adjustments. On October 4, TikTok shut down its e-commerce business in Indonesia, despite the fact that there are 6 million local TikTok e-commerce sellers in the country. It is said that Malaysia may follow suit.

As TikTok's logistics partner in Southeast Asia, J&T has previously received millions of daily orders locally through TikTok. This setback for TikTok's Indonesian e-commerce business also raises concerns about J&T's development in Southeast Asia.

In the middle of this year, J&T submitted its prospectus to the Hong Kong Exchanges and Clearing Limited, completely ending the speculation about its "listing in the U.S." or "listing in Hong Kong" in the past two years. The IPO plans to offer 326.6 million shares globally at HKD 12 per share, raising a total of HKD 3.528 billion, with a market capitalization of more than USD 13.5 billion after the IPO. Nine major investors, Aspex Management, Boyu Capital(博裕资本), D1 Capital, GLP, Sequoia Capital(红杉), SF(顺丰), Temasek(淡马锡), Tencent(腾讯), Hillhouse(高瓴), will participate in the offering as cornerstone investors, subscribing to a total amount of USD 199.5 million.

Established in Indonesia in 2015, J&T is currently the No. 1 express delivery operator in Southeast Asia in terms of parcel volume. Entering the domestic market in 2020, and landing in the Middle East and Latin America in 2022, J&T has been advancing into the global market.

As Chinese companies/entrepreneurs enter a new stage in their overseas exploration, the many challenges brought about by the global layout are increasingly being brought to the forefront for discussion. For example, the dispute over the legality of the shareholding structure faced by J&T in Indonesia is one of the epitomes of the compliance challenges faced by Chinese companies going overseas. Combined with the regulatory difficulties faced by TikTok in many overseas countries, the era of "barbaric growth" is over.

Recalling the previous setbacks of Chinese companies in India, it is even more alarming that TikTok and J&T have been challenged in Indonesia this year. EqualOcean will continue to follow the situation.