Grab Holdings Inc, Southeast Asia’s most
valuable start-up, is going public in the US through a merger with blank-cheque
company Altimeter Growth Corp. This is the largest-ever deal of its kind.
The Singapore-based start-up is set to
have a market value of about US$39.6 billion after the combination with the
special purpose acquisition company of Brad Gerstner’s Altimeter Capital
Management. Grab is raising more than US$4 billion from investors including
BlackRock Inc, Fidelity International and T. Rowe Price Group Inc as part of
the biggest US equity offering by a Southeast Asian company.
The deal would make the ride-hailing and
food-delivery giant the first Southeast Asian tech unicorn to go public through
a SPAC and give it funds to expand. Grab is trying to take advantage of a
US-led SPAC listing boom, even though it’s showing signs of slowing amid
increased scrutiny by regulators.
The combined entity’s stock will trade
on the Nasdaq in the coming months under the ticker GRAB. Altimeter Capital,
which orchestrated the initial public offering of Altimeter Growth in
September, is putting US$750 million into the company, about a fifth of the
fresh funds raised.
That, together with a three-year lockup
period for its sponsor shares, indicates Altimeter’s long-term commitment to
the company, Grab Chief Executive Officer Anthony Tan said. Altimeter, which
manages US$15 billion of assets, has also committed as much as US$500 million
to a contingent investment to be equal to the total amount of redemptions by
Altimeter Growth’s shareholders. This was reported by the Edge CEO Morning
Brief (Yoolim Lee, 14 April 2021).
Grab, the market leader in Southeast
Asia for so-called super apps for consumer services, expects its addressable
market to expand to more than US$180 billion by 2025, from US$52 billion in
2020. Its total gross merchandise volume last year was US$12.5 billion, more
than double from 2018 even as competition from archrival Gojek intensified and
the coronavirus pandemic restricted people’s movements.
The deal marks a remarkable turn for
Grab. Under pressure from SoftBank Group Corp and other investors, the company
had been negotiating a possible merger with Indonesia’s Gojek for most of 2020.
But the talks ultimately collapsed around December and Gojek began talks with
Tokopedia, another local internet giant.
Tan founded Grab in his native Malaysia
as a taxi-hailing app in 2012 with Hooi Ling Tan, a Harvard classmate. They
kicked off operations in Kuala Lumpur as what was then known as MyTeksi,
allowing users to book cabs.
Grab later relocated to Singapore before
expanding as a ride-hailing app from Indonesia to Vietnam, the Philippines,
Cambodia and Myanmar. With more than US$10 billion raised from investors led by
SoftBank over eight funding rounds, Grab became Southeast Asia’s largest
ride-hailing provider before expanding into food delivery, digital payments and
financial services across eight countries in the region.
Working toward profitability, Grab said
its mobility-services business is making money in all its markets, while food
delivery is in the black in five of six markets. The company said it had about
72% of Southeast Asia’s ride-hailing market, 50% of online food delivery and
23% of digital wallet payments last year. Grab was previously valued at about
US$16 billion, a person with knowledge of the matter said.
Source:
The Star
Experts are saying that Malaysian
companies are leaving the shores in search of greater market accessibility,
more diversified capital options and for a high-quality talent pool. They added
that Malaysia needs to undertake important structural changes if it is serious
about retaining such companies in the country.
Socio-Economic Research Centre executive
director Lee Heng Guie told StarBiz that the country has the ecosystem for
start-ups to be built and strengthened, but more needs to be done to fine-tune
the ecosystem as the needs for such start-ups are constantly changing.
Centre for Market Education CEO Carmelo
Ferlito said Singapore has a historical advantage based on political stability,
a business-friendly environment and a fair taxation system. And with mixed
signals from the present Government on policies, taxation, and regulations the
listing of start-ups will be hindered. Investors need clear picture on
requirements and advantages to remain in Malaysia. Many countries are competing
for potential unicorns, but we are not nimble enough. Why? We are tinted with
the same political and economic issues from the 70s.
Reference:
1.
Yoolim
Lee, Grab to list in US in record US$40b SPAC deal, The Edge, 13 April 2021
2.
Ganeshwaran
Kana, Grab – A missed opportunity for Malaysia, The Star, 15 April 2021
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