Grab Holding, the biggest ride-hailing and food delivery firm in Southeast Asia has agreed to a merger with Special Purpose Acquisition (SPAC) firm Altimeter Growth Corporation by securing a valuation of $40 billion. Grab intends to list on the NASDAQ under ticker symbol GRAB, following the deal’s completion. This is the largest black-check merger to date.
Special purpose acquisition companies are shell companies, set up to raise capital to acquire private companies. A SPAC listing bypasses Wall Street’s traditional IPO process. Altimeter Growth’s stock rose more than 8% in premarket trading after the announcement, from its previous close of $13.95 a share. As part of the deal, SoftBank-backed Grab will receive about $4.5 billion in cash, which includes $4 billion in private investment in public equity arrangement, managed by BlackRock, Fidelity, T. Rowe Price, Morgan Stanley’s Counterpoint Global fund, and Singapore’s sovereign wealth fund Temasek.
Grab delivers an array of digital services such as transportation, food delivery, hotel bookings, online banking, mobile payments, and insurance services from its app, and hence, it has got the ‘super app’ title. It currently operates in most of Southeast Asia, serving more than 187 million users in over 350 cities across eight countries. While SPACs have become an attractive investment mode on Wall Street, it is also getting traction in Asia with six regional-focused SPAC companies, that have collectively raised a capital of $2.7 billion 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 has certainly drawn the attention of the U.S. Securities and Exchange Commission and investors who were fearful of a market bubble.
“We found this was the better way to IPO,” Grab co-founder and CEO Anthony Tan said on the decision of the deal. He also claims that his company has been weighing over the last year. Altimeter committed more than 15% of Grab’s PIPE. Institutional investors looking for Asian consumer internet exposure are keen to diversify their allocation beyond a handful of companies. Grab Holdings has a plan to double down on the last-mile supply community, and to bulk up its monetary provider’s enterprise, equivalent to the digital financial institution and cell funds by utilizing the raised funding.
Grab attracted international consideration in 2018, when it acquired Uber’s Southeast Asia enterprise after an expensive five-year battle in return for a stake in itself. After the breakdown of the COVID-19 pandemic, the internet income of Grab surged by 70% in the last year, as shoppers shifted to online meals in the region. Hence, the company is now making a push into insurance coverage and lending in the area of 650 million individuals.
