Aiming to raise Rp 42 billion (US$3.16 million) in proceeds, the company will sell 23.07 percent of its existing shares, equivalent to 150 million units, to the public at Rp 280 to 300 per share.

The company will provide 150 million warrants as incentives to buyers, which will grant the holder special rights to buy Kioson’s underlying stock at a fixed price before the expiry date.

Kioson president director and co-founder Jasin Halim said he preferred the IPO over venture capital, which most startup companies opt for to raise capital. He had turned down all investment proposals from venture capitalist as they asked for majority ownership in the firm.

“We are not ready to sell majority ownership to venture capitalists. Therefore, we chose the IPO,” he said to journalists on Thursday.

Halim hoped the startup’s IPO would inspire other startups to go public for expansion, in line with statements made by the government and the financial service authority (OJK), to boost the capital market and the startup industry.

Kioson will spend 75.76 percent of the IPO proceeds to acquire PT Narindo Solusi Komunikasi, an online phone credit vouchers aggregator company, while the remaining 13.13 percent would be allocated for capital expenditure.

It aims to buy 99.34 percent ownership in Narindo from PT Monjes Investama, a minority shareholder in Kioson, through PT Mitra Komunikasi Nusantara. Monjes owns 51 percent of Mitra Komunikasi shares, which holds 4.94 percent of Kioson shares.

Kioson finance director Setiawan Parikesit Kencana expected the company to start profiting by next year after the Narindo acquisition. Within the January to April period, Narindo recorded Rp 398.74 billion in revenue and Rp 1.35 billion in net profit.

“Narindo will contribute 80 to 90 percent of our revenue next year,” Setiawan said.

Founded in 2015 in South Jakarta, Kioson provides an online-to-offline (O2O) payment gateway to purchase cellphone credit vouchers, train tickets, as well as to pay electricity bills and insurance premiums.

It partners with individual agents under profit sharing agreements. Kioson now has 15,000 agents all over Indonesia. The company aims to have 30,000 agents by the end of this year.

Walid Ichwani, 34, a Kioson agent in Lampung province said he could pocket Rp 20 million in revenue per month, mostly by selling phone credit and electricity vouchers. He said sales were good because he lived in a rural village, 20 kilometer from Kota Metro City, Lampung, Sumatra.

“The nearest mini market is 6 km away from my village, so people come to me if they need to buy vouchers,” he said.

Sinarmas Sekuritas equity analyst Wilbert said in his report that e-commerce in Indonesia had big growth potential, as internet penetration was still only around 51 percent of the population. In 2016 the revenue from e-commerce in Indonesia reached US$6.96 billion and is forecasted to grow with a 20.1 percent compound annual growth rate (CAGR) to $14.5 billion in 2021.

He viewed that Kioson’s business model, which targeted small and medium enterprises (SMEs) in rural areas, was promising as most big e-commerce companies currently only served online purchases using debit or credit card.

In fact, only 36 percent of adults in Indonesia own a bank account, while only 17.5 million people or 6 percent of the population have credit cards.

According to Kioson’s audited report for the first quarter of 2017, the company booked over fourfold revenue growth year-on-year (yoy) to Rp 25.96 billion. However, its net losses soared by 52.92 percent yoy to Rp 4.45 billion.

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