Indonesia’s sovereign wealth fund Danantara is considering a role in Grab Holdings Ltd’s planned $7 billion acquisition of GoTo Group, potentially allowing the country’s government to own a slice of an Asian internet powerhouse, Bloomberg reported on Friday.

Danantara has started preliminary discussions with GoTo to acquire a minority stake in a combined entity, according to people familiar with the matter, the report said.

This could help assuage concerns in the Indonesian government, resulting from the sale of a national tech champion to Singapore’s Grab, the people reportedly said.

According to the report, Grab and GoTo have made headway on a potential deal structure, but the pace of talks had slowed recently over concerns about potential regulatory demands.

It was reported that Indonesia’s antitrust agency said in May that it would look into potential risks and urged the companies to ensure any deal won’t create a monopoly.

It is unclear if the fund has held talks with Grab. Spokespeople for Grab, GoTo and Danantara declined to comment, the report added.

According to Bloomberg, Danantara’s participation would boost the chances of the companies obtaining clearance from Indonesia’s government, likely the biggest regulatory hurdle for a deal. The discussions with Danantara are at an early stage and may not lead to a transaction, the people reportedly said.

Grab has held on-and-off talks with GoTo for years. But a merger never materialized, partially due to antitrust concerns likely to arise from combining Southeast Asia’s two dominant ride-hailing and food-delivery groups.

Another ride-hailing company Uber left the region in 2018, in exchange for a stake in Grab. Smaller competitors have not eaten significantly into Grab and GoTo’s market share in Indonesia and Singapore.

Grab is considering a valuation of more than $7 billion for GoTo, Bloomberg reported in February, with one option being an all-stock purchase at about 100 rupiah a share.

According to the report, one scenario being discussed is for GoTo to first buy Grab’s Indonesian ride-hailing and food delivery business.

Following that, Singapore-based Grab would buy a majority stake in this combination, allowing it to run GoTo’s operations in Indonesia, the people said. In this scenario, GoTo would sell its ride-hailing business in Singapore to another buyer, the people said.

In a research note last month, Maybank Investment Bank said it sees a real risk of the regulator objecting to a Grab-Gojek merger in Singapore.

According to the note, in Singapore, GoTo only has Gojek, ie, ride hailing business, and in the recent past, the regulator rejected the proposed acquisition of Transcab by Grab. Recently in Taiwan, regulator has declined the proposed acquisition of FoodPanda by Uber.

In a scenario of Gojek exiting Singapore, it noted the market share could be proportionately divided to the remaining operators.

Grab, being the largest, should proportionality capture the largest chunk vacated by Gojek, it added.

The report also highlighted that in Indonesia, Grab-Gojek would end up with 80 percent market share of the Indonesian ride-hailing space. However, the research house noted their share within overall ground transportation would still be at a more comfortable level of 23 percent.

Further expanding the scope and including the other public transport services, Grab-Gojek’s combined market share would fall to 11 percent (about 5 percent to 6 percent if excluding food delivery).

On top, the regulator could issue more ride-hailing licenses (such as the recent entry of Xanh SM), which could introduce new competitors into the market.

“On food delivery, while Grab-Gojek combined would end up with 90 percent market share, we don’t think it will be of major regulatory concern as those services cater to the affluent segment of the market,” the research house said then.

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