The promise of South-East Asia has long been obvious to venture capitalists. Its young and growing population of 700m is becoming richer and more urbanised. And they are poorly served by stodgy incumbents. After a pandemic-era frenzy, however, shares of the region’s listed tech darlings plunged amid rising interest rates as investors lost patience with persistent losses. Valuations are yet to recover.

Two firms—Grab, based in Singapore, and GoTo, in Indonesia—are among the most prominent examples. Grab, which began in ride-hailing then expanded into food delivery, digital payments and more, saw its market value plunge from $40bn when it listed in December 2021 to just over a quarter of that a year later. The value of GoTo, formed by a tie-up in May 2021 between Gojek, another “super-app”, and Tokopedia, an e-commerce platform, likewise fell by three-quarters in the year after it listed for $28bn in April 2022.

But recently the two have turned a corner. Grab has posted three consecutive quarters of net profits. Analysts expect it to report a fourth when it delivers its next results on July 30th. GoTo, which in December 2023 offloaded 75% of Tokopedia to Bytedance, TikTok’s parent, is also now in the black, at least on its preferred measure of adjusted operating profit (before depreciation and amortisation).

Rumours are now swirling of a tie-up. That would create a regional tech giant second only to Sea Limited, the owner of Shopee, South-East Asia’s dominant e-commerce platform. The merged entity would control around four-fifths of ride-hailing and two-thirds of food delivery across the region. Yet it must first overcome Indonesian officials’ reservations.

Over the past three years both firms have been slashing costs while continuing to grow, resulting in big improvements in their ratios of operating expenses to revenue (see chart). They have each laid off hundreds of staff. Incentives to lure in consumers and drivers, once doled out with abandon, have become more targeted.

In addition, their fintech endeavours are gaining momentum. In the first quarter of 2025 Grab and GoTo held consumer-loan portfolios worth $566m and 5.7tn rupiah ($349m), respectively. These are puny when compared with traditional banks, but are growing fast. Grab’s outstanding loans grew by half, year on year, in the first quarter; GoTo’s more than doubled. Fintech now accounts for 10% of Grab’s revenue and 29% of GoTo’s. Both are aiming high. GoTo wants to grow its loan book to 8tn rupiah by next year. Grab is likewise planning a big fintech push in 2026.

Grab and GoTo’s lending products take advantage of the shabby state of credit reporting in much of South-East Asia. This is especially true in Indonesia, where far more adults have a smartphone than a formal bank account. Transaction data harvested from drivers, riders, merchants and users of the pair’s e-wallets is blended with third-party data to build credit profiles. Both firms lend conservatively and have modest credit losses.

The companies have turned for inspiration to China, home to several thriving super-apps. Both Grab and GoTo have sought software-engineering talent from the country, though neither operates there. GoTo has opened four tech hubs in China this year. “We’ve learned a lot from studying Chinese tech companies such as Meituan,” says Patrick Walujo, GoTo’s boss. “My main takeaway was that their most important capability is the algorithm.”

Yet the pair still have a long way to go. Although Grab’s value has soared by three-fifths this year, to $23bn, it remains well below the level at which the company listed. GoTo is languishing at a mere $4bn. Both also face a formidable fintech foe in Sea Limited, worth $92bn. Its loan book, at $6bn, dwarfs those of Grab and GoTo. And its e-commerce operation gives it significantly more data than either of them, says Jianggan Li of Momentum Works, a consultancy. Shopee’s share of South-East Asian food delivery is also creeping up.

That helps explain the rumoured merger discussions. Both firms have assiduously denied recent reports of an impending deal. Yet last month Grab fed the speculation with a $1.5bn issuance of convertible bonds, the uses of which “may include potential acquisitions”.

There would be solid commercial logic to a tie-up. Having muscled out foreign ride-hailing rivals such as Uber from all other major South-East Asian markets, Grab still faces stiff competition from GoTo in Indonesia, the most populous country in the region. For its part, GoTo, which once competed in five markets, has retreated to its home territory. The two split Indonesia’s ride-hailing market roughly in half, with Grab pricing consistently lower, according to a recent study by Bahana Sekuritas, a broker. Greater scale would also aid the two’s fintech efforts.

The deal, however, has become mired in Indonesian politics. In May renewed merger speculation and disgruntlement over low pay sent tens of thousands of drivers onto the streets of Jakarta. The chair of Indonesia’s transport-workers’ union decried the “monopoly practice” that would result from a tie-up, and called on competition authorities to intervene. Indonesia’s antitrust agency said it was keeping a close watch.

Officials have signalled that at least two conditions would need to be met for a merger to be approved: guarantees for drivers, and a significant local stake in the combined entity. Danantara, Indonesia’s new sovereign-wealth fund, could get involved, though it has said it is not “currently” engaged in talks. It is in the messy politics of Indonesia where the two super-apps’ fates may now be decided. ■

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