Grab, a Southeast Asian giant, announced on Tuesday that it would go public through a SPAC merger with Altimeter Growth Corp., in a deal that values the company at $ 39.6 billion – its largest blank check merger to date. to.
Grab says it plans to be listed on the Nasdaq under the ticker symbol “GRAB” upon the deal’s completion.
SPACs, or special acquisition companies, are shell companies or blank check companies created to raise 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 approximately $ 4.5 billion in cash, including $ 4 billion in a private public equity investment (PIPE) managed by BlackRock, Fidelity, T. Rowe Price, Morgan Stanley’s Counterpoint Global fund and Temasek, Singapore’s sovereign wealth fund. PIPEs are mechanisms for companies to raise capital from a select group of investors that enable the ultimate market debut through their financing.
Grab – last ranked No. 16 on last year’s CNBC Disruptor 50 list – delivers a range of digital services such as transportation, food delivery, hotel booking, online banking, mobile payments and insurance services from the app. The Singapore-based company has offices in most of Southeast Asia and serves more than 187 million users in more than 350 cities in eight countries.
While SPACs have become a popular investment vehicle on Wall Street, they are also gaining traction in Asia with six regionally focused SPAC companies raising $ 2.7 billion to date by 2021.
But in the first quarter of this year, capital raised by blank check companies such as Altimeter has already surpassed the 2020 total issuance. It has caught the attention not only of the US Securities and Exchange Commission, but also investors 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 a record high, Boston-based biotech company Ginkgo Bioworks, number 44 on last year’s CNBC Disruptor 50 list, is considering an equally large $ 20 billion blank check merger, according to Bloomberg. .
During the pandemic, Southeast Asia saw a surge in the use of digital services such as e-commerce, food delivery and online payments. According to a report by Google, Temasek Holdings and Bain & Company, as many as 40 million people in six countries in the region – Singapore, Malaysia, Indonesia, the Philippines, Vietnam and Thailand – first came online in 2020.
Still, Covid-19 has forced regional private market decacorns (start-ups worth more than $ 10 billion) to reduce staff and rethink what will define a dominant “super-app” suite of on-demand services. It has also intensified the competitive landscape in an already saturated market that has proven difficult to turn a profit.
After a period of intense and costly competition from Uber to dominate ride-sharing in many markets, Indonesian rival Gojek sold its Southeast Asian operations to Grab three years ago in exchange for acquiring a stake in the company.
In January, Reuters reported that Grab’s net revenues were up 70% year over year and recovered to pre-pandemic levels, with ride-hailing business breaking out even in all operating markets, including the largest, Indonesia. .
Grab and Gojek were reportedly close to finalizing their own merger late last year.
Reuters reported that Gojek – which was number 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, pending a possible double listing in Jakarta. and the USA.