Grab goes public in a $ 40 billion SPAC deal, the largest ever recorded

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The Singapore-based startup announced on Tuesday that it would merge with a specialty acquisition company, or SPAC, backed by Altimeter Capital in a deal that would pave the way for a New York listing and Grab’s value at approximately $ 39.6 billion. .

That’s more than double the roughly $ 16 billion at which the company was last privately valued, and would be the largest deal ever with an SPAC or blank check company, according to Dealogic. The previous SPAC record was held by United Wholesale Mortgage, a US home loan provider, which reached a valuation of $ 18.3 billion last fall, according to the data provider.

Under the deal, Grab will raise more than $ 4 billion in cash from investors including Fidelity, BlackRock, T. Rowe Price, Abu Dhabi sovereign wealth fund Mubadala and Singapore’s government investment arm Temasek. The American investment company Altimeter Capital is investing $ 750 million.

Grab plans to begin trading on NASDAQ under ticker symbol “GRAB” in the coming months.

Sign of SPAC frenzy

SPACs are shell companies with limited or no corporate resources. They usually only go public to raise money from investors which is then used to buy existing businesses.

No delay in sight for IPOs or SPACs

These firms used to be ridiculed on Wall Street, but have boomed worldwide in the past year. According to data from Refinitiv, more than 310 have already been launched by 2021, surpassing last year’s total of 257. They’ve raised nearly $ 93 billion in the first quarter of this year alone.

Grab is the latest big name to have merged with a SPAC as a means of going public. Recently, a slew of major companies have opted to take the same route to the market, including Playboy, DraftKings, and electric vehicle startups Nikola and Arrival.

According to Refinitiv, 110 SPAC combinations worth $ 232 billion were announced in the first three months of the year.

Billionaires and celebrities are looking to get a slice of the action by setting up their own SPACs. Richard Branson and Peter Thiel, as well as athletes such as Alex Rodriguez and Colin Kaepernick, pop star Ciara, investor Bill Ackman and former White House economic adviser Larry Kudlow, all participated.
But the boom is increasingly drawing the attention of regulators such as the Securities and Exchange Commission. The agency has warned that everyday investors should not throw their money behind SPACs just because a celebrity is attached to them, and indicated on Monday that it would step up scrutiny of SPAC’s accounting practices.

Grab the path forward

Grab said on Tuesday that the reverse merger is different from other such deals.

For example, it pointed out that the shares to be acquired by Altimeter will be subject to a three-year freeze period, which it says is significantly longer than comparable deals, and highlighted confidence in the startup’s long-term potential.

Asked why the company chose to go public in the United States rather than Southeast Asia, Grab co-founder Tan Hooi Ling said the company wanted to tap into its larger investor base.

“US listing is important to us because it gives us access to the widest global liquidity base,” she told CNN Business on Tuesday.

“At the same time, we are still exploring alternatives to create a concurrent entry locally as well, and those are still existing conversations that we are investigating.”

Grab was founded by Tan and fellow Malaysian entrepreneur Anthony Tan in 2012, and quickly grew into Southeast Asia’s most valuable private company. It acquired Uber’s Southeast Asia business in 2018 and has since expanded into a variety of other services, including food delivery, digital payments, and even financial services.
In recent years, the company has sought to position itself as a provider of a ‘super app’ that allows users to do everything from booking rides to taking out insurance and loans. The company grew to more than 25 million monthly active users in nearly 430 cities in eight countries.

The company is akin to a mashup of “Uber plus DoorDash plus Ant Financial, all in one app,” said Altimeter Capital CEO Brad Gerstner.

Prior to the SPAC deal, Grab had already raised more than $ 10 billion from a selection of heavyweight investors, including the Japanese conglomerate SoftBank SFTBF and Chinese firm Didi Chuxing, which plans to file in confidence for its own IPO in New York in the coming weeks, a person familiar with the case said.

Grab has also been a winner of the coronavirus crisis. Last year, its gross trade value, a measure of sales, reached $ 12.5 billion, higher than pre-pandemic levels and more than double that of 2018, the company said.

– Julia Horowitz contributed to reporting.

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