Grab’s Recent Multibillion-Dollar SPAC Deal, Regulatory Hurdle, and Growth

Grab, the super app from Southeast Asia, is going public in the US by agreeing to merge with a special-purpose acquisition company (SPAC), valuing the nine-year-old company at $39.6 billion US dollars after the combination with Altimeter Growth Corp.


It is raising more than $4 billion in the largest U.S. equity offering by a Southeast Asian company, with backers including BlackRock Inc., Fidelity International, and T. Rowe Price Group Inc.

The deal will make the Southeast Asian ride-hailing and food-delivery behemoth the first Southeast Asian tech unicorn to go public with a SPAC, allowing it to grow. Grab is attempting to capitalize on a U.S.-led SPAC listing surge, despite indications that it is slowing due to heightened regulatory scrutiny.


“Altimeter is investing in a way that demonstrates our aligned values, with a three-year lock-up on their sponsor promote shares and unprecedented contribution of shares to our new GrabForGood endowment fund,” said Grab CEO Anthony Tan.


Grab Singapore Listing


After a couple of days after its US$40 billion US SPAC merger, Grab Holdings, Southeast Asia's ride-hailing, and distribution behemoth, is seeking a secondary listing in Singapore after completing a Nasdaq listing via a US$40 billion SPAC merger.

The listing on the Singapore Exchange (SGX) will allow Grab to get an investor base close to where its regional company is located, possibly allowing its clients, drivers, and merchant partners to sell their shares easily.


Grab Under Regulatory Scrutiny


The year was 2018 when the ride-hailing titan took over Uber’s operations. The two companies received a total fine of S$13 million or $9.5 million USD by Singapore's antitrust watchdog for their merger contract. It ordered Uber to sell vehicles from its local leasing business to any competitor that offers a reasonable bid.


In March 2018, Uber Technologies, headquartered in the United States, sold its Southeast Asian business to Grab, its regional competitor, in exchange for a 27.5 percent stake in the Singapore-based company.


The deal drew regulatory attention, with the Competition and Consumer Commission of Singapore (CCCS) launching an investigation just days after it was revealed.


“Mergers that substantially lessen competition are prohibited, and CCCS has taken action against the Grab-Uber merger because it removed Grab’s closest rival, to the detriment of Singapore drivers and riders,” CCCS Chief Executive Toh Han Li said in a statement.


Measures include dropping Grab’s exclusivity agreements with any taxi fleet in Singapore and requiring Uber to sell Lion City Rental’s vehicles to any potential competitor who makes a reasonable bid.


The Move to Digital Banking


Looking back, Grab made a move in 2017 when it unveiled its GrabPay digital wallet for hawker stalls, restaurants, and shops in Singapore. This marks the company's move into mobile payments due to its attempts to diversify outside transportation services.


“Enabling Grab payments in restaurants and shops is a significant step towards becoming the largest consumer internet platform in Southeast Asia,” Tan Hooi Ling, co-founder of Grab.


And by December 2020, the company formed a consortium with Singtel, Asia's leading telecom technology company, to apply for a wireless full bank license in Singapore. Grab will own 60 percent of the consortium, while Singtel will own 40 percent.


With their respective financial services such as Dash, VIA, GrabPay, and GrabInsure, both Grab, and Singtel are pushing innovation and financial inclusion in Singapore.


The consortium is well-positioned to develop a modern, digital-first model of banking that is simple to use, sustainable, and accessible. This is all thanks to their combined digital expertise, fintech know-how, and experience from running customer-centric companies.


Grab’s Winnings


Grab is now one of the largest super apps in Southeast Asia. From the humble beginnings in Anthony Tan’s garage to the region’s tech unicorn. There is no stopping its momentum.


February 2020, the company raised over $850 million USD from Japanese investors, Mitsubishi UFJ Financial Group (MUFG) and TIS Inc (TIS). The funding will create accessible and affordable financial services for the people in Southeast Asia.


After a couple of months and the beginnings of the 2020 pandemic, ride-hailing services slowed down and turned to deliveries. This kind of service became their biggest segment contributor to its revenue with 49 percent.


2020 was also the year when they formed a consortium with Singtel. This is to expand its reach and to provide customer-centric digital banking.


Adding to the success of riding the SPAC vehicle with Altimeter Capital Management, its value soared to $39.6 billion USD. Altimeter even agreed to do a three-year lock-up of the shares that they will receive for facilitating the process.


Conclusion


Even with challenges, Grab is continuously looking for ways on how to innovate. If you notice the trend, every time the company is achieving a major win, they do not stop. They continue to think of what is the next step or how the company will grow.


Who would imagine that a small-time ride-hailing app from Kuala Lumpur will now have its digital wallet, delivery services, digital bank, and currently listed on NASDAQ? Probably their CEO, Anthony Tan, and his team that keeps on moving forward.




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REFERENCES:


https://www.forbes.com/sites/robertolsen/2021/04/14/singapore-superapp-grab-to-go-public-with-40-billion-valuation-in-spac-deal/?sh=38634aea3f60

https://www.bloomberg.com/news/articles/2021-04-13/singapore-s-grab-to-list-in-u-s-in-record-40-billion-spac-deal

https://finance.yahoo.com/news/singapore-grab-list-u-record-100000084.html

https://www.reuters.com/technology/exclusive-grab-considering-secondary-singapore-listing-after-us-spac-merger-2021-04-16/

https://www.grab.com/sg/press/business/grab-and-singtel-partner-for-singapore-digital-banking-licence/

https://www.reuters.com/article/grab-payments/ride-hailing-firm-grab-launches-e-wallet-for-hawker-stalls-in-singapore-idUKL4N1N81BY?edition-redirect=uk

https://www.techinasia.com/learned-grabs-latest-financials