Grab to unveil world’s biggest SPAC merger, valued at nearly $40 billion: sources

grab-to-unveil-world’s-biggest-spac-merger,-valued-at-nearly-$40-billion:-sources

With operations in eight countries and 398 cities, Grab is already Southeast Asia’s most valuable start-up

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Published Apr 13, 2021  •  2 minute read

A Grab Holdings Inc. driver waits for an order in the Bukit Bintang district of Kuala Lumpur, Malaysia. Photo by Samsul Said/Bloomberg SINGAPORE — Southeast Asia’s biggest ride-hailing and food delivery firm Grab Holdings will announce as early as Tuesday a merger with U.S.-based Altimeter that will value Grab at nearly US$40 billion and lead to a public listing, four people told Reuters.

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Access articles from across Canada with one account. Share your thoughts and join the conversation in the comments. Enjoy additional articles per month. Get email updates from your favourite authors. The merger, which will be the biggest blank-check company deal ever, underscores the frenzy on Wall Street as shell firms have raised US$99 billion in the United States so far this year after a record US$83 billion fundraising in 2020.

Singapore-based Grab’s agreement with a special purpose acquisition company (SPAC) backed by Altimeter Capital includes a US$4 billion private investment in public equity (PIPE) from a group of Asian and global investors including Fidelity International and Janus Henderson, the sources said.

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Grab declined to comment on the SPAC deal.

There was no response from Silicon Valley-based Altimeter, Fidelity and Janus Henderson to emailed requests seeking comment.

The sources declined to be identified due to the sensitivity of the matter.

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Article content The deal for Grab, which was valued at just over US$16 billion last year, will be a big win for its early backers such as SoftBank Group Corp and China’s Didi Chuxing.

Last year, Mitsubishi UFJ Financial Group Inc and IT services firm TIS Inc invested US$856 million in Grab as it expanded into financial services.

The bumper valuation validates Grab’s co-founder Anthony Tan’s strategy to aggressively tap growth in new sectors and ramp up market share by pumping billions of dollars to localize its services and invest in high-growth economies.

“Institutional investors looking for Asian consumer internet exposure are keen to diversify their allocation beyond a handful of companies,” said Varun Mittal, head of emerging markets fintech business at consultancy EY.

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Article content Grab attracted global attention in 2018 when it acquired Uber’s Southeast Asia business after a costly five-year battle and in return took a stake in the company.

Reuters reported in January that Grab, which has so far raised about US$12 billion, was exploring a U.S. listing.

Grab’s agreed transaction will surpass electric vehicle maker Lucid Motors’ US$24 billion deal struck with a SPAC in February.

Battleground Indonesia With operations in eight countries and 398 cities, Grab is already Southeast Asia’s most valuable start-up.

Leveraging its ride-hailing business started in 2012, the firm has moved into food and grocery deliveries, courier services, digital payments, and is now making a push into insurance and lending in a region of 650 million people.

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Article content The listing will give Grab extra firepower in its main market, Indonesia, where local rival Gojek is close to sealing a merger with the country’s leading e-commerce business Tokopedia.

Grab, whose net revenue surged 70 per cent last year, is yet to turn profitable, but it expects its biggest segment – the food delivery business – to break even by end-2021, as more consumers shift to online food delivery after the COVID-19 pandemic.

Cash-rich, U.S.-listed Sea is also muscling into food delivery and financial services in Indonesia. Both Grab and Sea won digital bank licences in Singapore last year.

© Thomson Reuters 2021


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