Grab set for US listing via ‘world’s biggest’ SPAC merger

Grab Holdings Inc., the company behind Southeast Asia’s largest ride-hailing and food delivery platform, is set to go public in the U.S. through a merger with a shell company that will value it at nearly $40 billion. 

In a statement on April 13, the Singapore-headquartered company disclosed its partnership with Altimeter Growth Corp., a special-purpose acquisition company. The upcoming merger was touted as the world’s biggest ever by a blank check company.

The combined entity’s stock will trade at the Nasdaq under the ticker “GRAB” in the “coming months,” the company said.

The proposed deal values Grab at approximately $39.6 billion in initial pro-forma equity value.

The transaction is also expected to provide the company $4.5 billion in cash proceeds, including $4 billion in private investments from investors like BlackRock, T. Rowe Price, Fidelity, as well as sovereign wealth funds such as Abu Dhabi’s Mubadala and Singapore’s Temasek.

Altimeter Capital, the technology-focused investment firm backing the SPAC, also chipped in $750 million, along with up to $500 million in contingent investment to be equal to the total amount of redemptions by Altimeter Growth’s shareholders.

Moreover, sponsor shares from Altimeter Capital are subjected to a three-year lock-up period, proving the partner’s long-term commitment to the company, said Grab co-founder and CEO Anthony Tan. A tenth of the sponsor shares is also going to support the startup’s latest GrabForGood endowment fund for social and environmental support programs.

At the transaction’s close, Grab’s Tan will receive a majority voting control of 60.4% and own a 2.2% stake in the company, according to Altimeter Capital’s regulatory filing with the U.S. Security and Exchange Commission.

Grab is advised by Evercore, J.P. Morgan and Morgan Stanley Asia (Singapore) Pte on the deal.

Founded in 2012, Grab started as a taxi-hailing service platform in Malaysia. Since then, the startup expanded into food, grocery and parcel deliveries, digital payments and financial services. The self-proclaimed “super app” is now operating in 428 cities across eight countries.

Grab said its decision to become a public company is driven by its strong performance in 2020. In the year, its revenues jumped by 70% on the back of its profitable food delivery business. The company also posted $12.5 billion in gross merchandise volume, more than doubling its figure in 2018. By 2025, it expects its total addressable market to grow more than $180 billion from $52 billion last year.

Moreover, Grab claimed to have captured 72% of Southeast Asia’s ride-hailing market, 50% of its online food delivery space and 23% of the region’s digital wallet payments in 2020.

Before the SPAC deal, Grab already secured over $10 billion from huge investors, like Masayoshi Son’s Softbank and Chinese ride-hailing company Didi Chuxing. Uber Technologies, a former rival, also supported the company after selling its Southeast Asian business to it.

Grab is the latest name among private firms intending to raise capital via SPAC mergers. More than 310 shell companies have already launched in the U.S. this year, CNN reported, citing data from Refinitiv. Just this first quarter, they raised almost $93 billion.

Grab initially held talks with its Indonesian rival Gojek for a potential merger last year but it did not materialize.

In January, Reuters reported that it held discussions with local e-commerce platform Tokopedia for a potential merger valued at $18 billion, ahead of a dual listing in Indonesia and the U.S. The partnership is getting close to being sealed, sources told Reuters.

Another Indonesian firm, Traveloka, is locking its sights for a U.S. listing through a SPAC merger.

Photo from Grab Singapore