South-east Asian “super app” Grab, which offers services from ride hailing and food delivery to online banking, is to float in the US in a record deal with a so-called Spac investment company that values the loss-making business at almost $40bn (£29bn).
Singapore-headquartered Grab, which intends to list on Nasdaq in the US, has struck a $39.6bn merger deal with US-based Altimeter Growth Corp. It is by far the biggest deal to date involving a special purpose acquisition company (Spac) – also known as a “blank cheque” shell company that raises money first and seeks businesses to buy later – which has become the latest trend in global finance over the last year.
As part of the deal Grab, whose valuation has more than doubled over the past 18 months, will receive about $4.5bn in cash. This includes $4bn in a private investment in public equity arrangement, a funding mechanism typical of Spacs, in the largest-ever share sale by a south-east Asian company in the US.
“I remember years ago when we were talking to investors, some folks didn’t even know where south-east Asia was on a map,” said Anthony Tan, co-founder and chief executive of Grab, in an interview on CNBC following the announcement. “Today we announce what is expected to be the largest US equity offering in south-east Asia … and that the ‘super app’ strategy works.”
Founded in 2012, Grab started out as an Uber-like ride-hailing app rolling out across parts of south-east Asia. Since then it has added a variety of services – including hotel booking, food delivery, insurance and banking and mobile payments – becoming a one-stop shop for services that are usually independently offered by a range of apps.
Grab has been a pandemic winner as drivers were able to cope with the loss of customers during lockdown as the public placed orders for services to be delivered to homes. Grab, which operates in eight countries, recorded $12.5bn in gross revenue last year.
Its backers include Japan’s SoftBank, Uber Technologies and Chinese ride-hailing company Didi Chuxing, while the merger and flotation has attracted investors including BlackRock, Morgan Stanley, Mubadala of Abu Dhabi and Singapore’s Temasek.
A record $99bn has already been raised by 306 Spacs this year, with the basketball star Shaquille O’Neal, former Cosmopolitan editor Joanna Coles and Martin Luther King Jr’s son among those involved in launches. In 2020, a total of $83bn was raised by 248 Spacs. Last month, David Schwimmer, the chief executive of the London Stock Exchange Group (LSEG), warned that the “frothy” market for Spacs could prove to be a bubble and “end poorly” for some investors.