SINGAPORE (Reuters) -Grab Holdings, the largest ride-hailing and food delivery firm in Southeast Asia, clinched a merger on Tuesday with special-purpose acquisition company Altimeter Growth Corp securing a valuation of nearly $40 billion and paving the way for a coveted U.S. listing.<\/p>\n
The merger, the biggest blank-check company deal ever, underscores the frenzy on Wall Street as shell firms have raised $99 billion in the United States so far this year after a record $83 billion in 2020.<\/p>\n
As part of Singapore-based Grab\u2019s agreement with the SPAC backed by Altimeter Capital, investors such as Temasek Holdings, BlackRock, Fidelity International, Abu Dhabi\u2019s Mubadala and Malaysia\u2019s Permodalan Nasional Bhd will participate in a $4 billion private investment in public equity offering.<\/p>\n
Funds managed by Altimeter Capital will lead the investment with $750 million.<\/p>\n
\u201cInstitutional investors looking for Asian consumer internet exposure are keen to diversify their allocation beyond a handful of companies,\u201d said Varun Mittal, head of emerging markets fintech business at consultancy EY.<\/p>\n
Grab said its decision to become a public company was driven by a strong financial performance last year.<\/p>\n
The transactions validate Grab\u2019s co-founder Anthony Tan\u2019s strategy of aggressively tapping growth in new sectors and ramping up market share by pumping billions of dollars to localise its services and invest in high-growth economies.<\/p>\n
Tan told Reuters the funds will be used to double down on the last-mile delivery network and to bulk up its financial services business, such as digital bank and mobile payments.<\/p>\n
The 39-year-old launched Grab as a taxi app in Malaysia in June 2012 with fellow Harvard Business School alumni Tan Hooi Ling, and then quickly took it regional.<\/p>\n
The deals for Grab, which was valued at just over $16 billion last year, are a big win for its early backers such as SoftBank Group Corp and China\u2019s Didi Chuxing.<\/p>\n
Reuters earlier reported that Grab would announce the deal on Tuesday.<\/p> Altimeter Growth and Grab will become fully-owned subsidiaries of a new holding company, which is expected to be valued at $39.6 billion on an initial proforma equity basis.<\/p>\n \u201cSoutheast Asia is one of the fastest growing digital economies in the world, with a population approximately twice the size of the United States. Yet online penetration for food delivery, on-demand mobility and electronic transactions are a fraction of the U.S. and China,\u201d said Brad Gerstner, founder and chief executive officer of Silicon Valley-based Altimeter.<\/p>\n The transactions will provide Grab with about $4.5 billion in cash proceeds.<\/p>\n The deals, which have been approved by the boards of both Grab and Altimeter Growth, are aimed to close by July.<\/p>\n \u201cGrab is now synonymous with Southeast Asia\u2019s exciting growth story,\u201d said Greg Moon, managing partner at SoftBank Investment Advisers.<\/p>\n Grab attracted global attention in 2018 when it acquired Uber\u2019s Southeast Asia business after a costly five-year battle in return for a stake in itself.<\/p>\n Reuters reported in January that Grab, which has so far raised about $12 billion, was exploring a U.S. listing. [L1N2JT0HC]<\/p>\n \u201cFor us, it was about depth, it is highly liquid, it is large with global names, global investors,\u201d Tan said on why Grab choose the U.S. markets for a listing.<\/p>\n Grab\u2019s agreed transaction will surpass electric vehicle maker Lucid Motors\u2019 $24 billion deal struck with a SPAC in February.<\/p>\n With operations in eight countries and over 400 cities, Grab is Southeast Asia\u2019s most valuable start-up.<\/p>\n Leveraging its ride-hailing business, it has moved into food and grocery deliveries, courier services, digital payments, and is now making a push into insurance and lending in a region of 650 million people.<\/p>\n The listing will give Grab extra firepower in its main market of Indonesia, where local rival Gojek is close to sealing a merger with the country\u2019s leading e-commerce business, Tokopedia.<\/p>\n Grab is also facing more competition from cash-rich, U.S.-listed Sea. Both Grab and Sea won digital bank licences in Singapore last year.<\/p>\n Grab, whose net revenue surged 70% last year, has yet to turn profitable. The food delivery segment became its biggest business as more consumers shift to online food delivery after the pandemic.<\/p>\n Grab reported adjusted net revenue of $1.6 billion in 2020 and forecasts this to rise to $4.5 billion in 2023. It expects to turn positive on an earnings before interest, taxes, depreciation, and amortization basis in 2023.<\/p>\n Evercore was the lead financial advisor to Grab on the deal and JPMorgan and Morgan Stanley were co-advisors.<\/p>\nBATTLEGROUND INDONESIA<\/h2>\n