Southeast Asia’s ride-hailing giant Grab announced Tuesday that it’s set to go public through a SPAC merger with Altimeter Growth Corp., in a deal that values the company at $39.6 billion — the largest blank-check merger to date.
Grab says it intends to list on the Nasdaq under ticker symbol “GRAB” following the deal’s completion.
SPACs, or special purpose acquisition companies, are shell companies or blank-check companies set up for the purpose of raising capital to acquire private companies. A SPAC listing bypasses Wall Street’s traditional IPO process.
As part of the mega-deal, SoftBank-backed Grab will receive about $4.5 billion in cash, which includes $4 billion in a private investment in public equity (PIPE), managed by BlackRock, Fidelity, T. Rowe Price, Morgan Stanley’s Counterpoint Global fund and Singapore’s sovereign wealth fund Temasek. PIPEs are mechanisms for companies to raise capital from a select group of investors that make the final market debut possible through their financing.
Grab — most recently ranked No. 16 on last year’s CNBC Disruptor 50 list — delivers an array of digital services such as transportation, food delivery, hotel bookings, online banking, mobile payments and insurance services from its app. The Singapore-based company has operations throughout most of Southeast Asia, and serves more than 187 million users in over 350 cities across eight countries.
While SPACs have become a hot investment vehicle on Wall Street, they’re also gaining traction in Asia with six regional-focused SPAC companies that have collectively raised $2.7 billion thus far in 2021.
But in the first quarter this year, capital raised by blank-check firms like Altimeter has already outpaced 2020’s total issuance. It’s not only drawn the attention of the U.S. Securities and Exchange Commission, but also investors who are fearful of a market bubble.
Still, new deals continue to flood the market — more than 100 in March alone, according to SPAC Research.
While Grab’s merger remains record-setting, Boston-based biotech company Ginkgo Bioworks, ranked No. 44 on last year’s CNBC Disruptor 50 list, is said to be considering an equally-massive $20 billion blank-check merger of its own, according to Bloomberg.
Throughout the pandemic, Southeast Asia saw a surge in the use of digital services like e-commerce, food delivery and online payment. As many as 40 million people in six countries across the region — Singapore, Malaysia, Indonesia, the Philippines, Vietnam and Thailand — came online for the first time in 2020, according to a report from Google, Temasek Holdings and Bain & Company.
Still, Covid-19 has forced regional private market decacorns (start-ups valued at more than $10 billion) to cut staff and rethink what will define a dominant “super app” suite of on-demand services. It’s also intensified the competitive landscape in an already saturated market that’s proven difficult to turn a profit.
After a period of intense and expensive competition by Uber to dominate rideshare in many markets, Indonesian rival Gojek sold its Southeast Asia business to Grab three years ago in return for Uber receiving a stake in the company.
In January, Reuters reported that Grab’s net revenue had grown 70% year over year, recovering to pre-pandemic levels with its ride-hailing business breaking even in all operating markets, including its largest, Indonesia.
Grab and Gojek were reportedly close to finalizing a merger of their own late last year.
Reuters reported that Gojek — which is ranked No. 10 on last year’s CNBC Disruptor 50 list — is now in advanced talks with Indonesian e-commerce leader Tokopedia for an $18 billion merger, ahead of a potential dual listing in Jakarta and the U.S.