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Behind Cashlez Optimism to IPO Soon

Reserve stock for three global investors

Marsya Nabila - 18 March 2020

Cashlez, a fintech startup for payment gateway and mPOS, has performed corporate action to be listed in the stock exchange. According to the plan, the company aims for Rp90 billion to Rp100 billion by releasing 300 million shares or 20.29% from modal to be placed and fully channeled after IPO. The price ranging for Rp298-Rp358 per share.

Cashlez's President Director, Tee Teddy Setiawan said, the fund raised will be channeled to acquire similar organizations engaged in payment gateway named Softorb Technology Indonesia. The rest will be for operational matters.

"Around 48.57% will be used to acquire 51% STI shares. The 51.43% will be used for company operational," he said.

Teddy said, the company attracted to STI because of its focus on front-end. While Cashlez is focus on back-end. "We need the front-end to feed transactions, that is what STI do with their providing front-end."

"Therefore, the business is quite sustainable. Also, we need to be major with 51%, for more synergy in terms of finance can be consolidated in order to be more healthy," Teddy continued as quoted from Kontan.

The company appointed Sinarmas Sekuritas as the guarantor of the issuance of securities. Cashlez is targeted to pocket an effective statement from OJK on April 7, 2020 and the public offering period will take place the day after. The listing of shares on the IDX is planned for April 20, 2020.

Sumitomo Corporation as shareholders said, it believes that payment systems are increasingly needed in the coming new era such as MaaS (Mobility-as-a-Service). In this case, the Mobile Payment of Sale (mPOS) system from Cashlez will provide benefits for consumers and service providers.

In terms of performance, in the period of October 2019, Cashlez posted a net income of Rp11.73 billion, up 96.07% yoy. This increase was supported by an increase in the volume of transactions processed. Until February 2020, the transaction volume in Cashlez reached Rp1.3 trillion.

Teddy is targeting revenue growth of 120%. STI will also support its contribution as a subsidiary.

Cashlez position in the industry

One of Cashlez's automotive merchant / Cashlez

As an mPOS player, Cashlez expands its services by accepting payment by card, either an application-based credit card or debit card on a smartphone that can be connected to a card reader via Bluetooth.

In addition, merchants can also accept digital payment methods with QR codes (LinkAja, Ovo, GoPay, ShopeePay, and Kredivo), Cashlez-Link for payments on e-commerce sites, and virtual account payments.

The number of Cashlez merchants is claimed to have doubled from its position per August 2019 of 6 thousand merchants across first-tier cities. Most merchants come from the fashion & accessories, retail, electronics, professional services, automotive and watches & jewelry business segments.

There are many and diverse types of Cashlez players offering each of its advantages. Among them are Qasir, Pawoon, Nuta, Youtao, and the closest one is Moka. From the Moka product range, it is not only a matter of innovation in MPOS, but has touched on other verticals related to the merchant business.

In an earlier interview, Moka Co-Founder and CEO Haryanto Tanjo explained his ambition to become a "super app merchant." The company targets 100 thousand merchants to join Moka this year, while currently there are more than 30 thousands. Two-thirds who join are culinary businesses, and the rest are retail and services.

Whether you want an IPO or not,  the online cash register adopted SaaS business model with b2b as target customers. Naturally, businesses have clearer economic units, like the roadmap to lead to profitability and a certain monetization scheme by subscribing.

Online cashier application business is actually still in the early stages, aka immature. It's due to many merchants, especially micro, which have not been well educated about the benefits of digital applications for business development. The percentage of business people who have been reached by the digital world are still far behind those who are offline.

Quoting from the Ministry of Cooperatives and Small and Medium Enterprises (Kemenkop UKM), in 2017 as many as 3.79 million micro, small and medium enterprises (MSMEs) have utilized the online platform in marketing their products. This number is around 8 percent of the total SMEs in Indonesia, which is 59.2 million.

Worry not with the current market condition

Amidst the global economic slowdown due to the Covid-19 virus pandemic, Teddy said he was optimistic that Cashlez shares could be well absorbed by the public. According to him, the IPO is a long-term plan that has been prepared long before the outbreak of the virus.

"The impact is only from retail investors. However, from institutional investors, it continues to run," Teddy said as quoted by Investor.id.

The company has also gathered three large investors to absorb shares. These investors were met when Cashlez held a roadshow, they were individual investors with wide networks and institutions who shared the same vision with the company.

It is well known that the stock exchange regulator together with the FSA have prepared all the steps to suppress the sluggish capital markets. One of them is encouraging institutional investors with large-amount funds to invest, namely BPJS Employment (now BPJAMSOSTEK), the Indonesian Pension Fund Association (ADPI), and the Financial Institution Pension Fund Association (ADPLK).

This momentum was used by the three institutions to buy shares of companies with good fundamentals at a discounted price. BPJAMSOSTEK has prepared an allocation of IDR 8 trillion to buy shares this year. The fund allocation is assuming that they only buy, not sell.

The majority of shares purchased are in the blue chip category which is included in the LQ45 Index and BUMN shares. As of December 2019, BPJAMSOSTEK managed funds of Rp.431.6 trillion. This money was allocated to a fixed income instrument of 71.4%, 19.09% of shares, mutual funds of 9.34%, and the remainder of direct investment (property and investments).

This type of investor has the characteristics of buying shares for long-term needs in order to get optimal profit, so that they are not sold at any time in a short period of time.

The Indonesian Central Securities Depository (KSEI) noted that Indonesia had 2.47 million capital market investors last year, up from the previous year's 1.61 million investors. Local investors have a composition of 98.97% and the rest are foreign investors. Not much different, retail investors reached 98.89% of the total, while institutional investors amounted to 1.2%.

Original article is in Indonesian, translated by Kristin Siagian

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