Grab to go public in US via $40 billion SPAC

• Grab made a deal with Altimeter via SPAC worth $40 billion
• Grab reported 70% year-on-year increase in revenue in 2020
• Altimeter agreed to a three-year lock-up period for its sponsor shares

Ride-hailing and delivery company Grab has announced its plan to go public in the United States. It formed a partnership with Altimeter via special purpose acquisition company (SPAC) worth $40 billion.

Grab partners with Altimeter via SPAC worth $40 billion

Grab intends to go public in the US in a deal that would value the company at about $40 billion. Under the deal, Grab will receive up to $4.5 billion in cash including more than $4 billion through a fully committed private investment in public equity (PIPE) financing managed by investors such as Fidelity, BlackRock, T. Rowe Price, Abu Dhabi sovereign wealth fund Mubadala, and Singapore government investment arm Temasek. US investment firm Altimeter is putting up $750 million. Grab plans to start trading on the National Association of Securities Dealers Automated Quotations (NASDAQ) under ticker symbol "GRAB" in the coming months.

If the deal goes through, it would be the world’s largest SPAC merger. The tie-up is shaping to be the largest US equity offering by a Southeast Asian company.  Anthony Tan, CEO and co-founder of Grab, shared, “It gives us immense pride to represent Southeast Asia in the global public markets. This is a milestone in our journey to open up access for everyone to benefit from the digital economy”. Grab expects its total addressable market to grow from $52 billion last year to $180 billion by 2025.

Grab reported 70% year-on-year increase in revenue in 2020

Grab shared that its decision to list in the US market was driven by its performance in 2020. It reported gross merchandise value of approximately $12.5 billion last year and its revenue increased by 70% year-on-year. To date, it also reported 1.9 billion transactions completed, 25 million monthly transacting users, five million registered drivers, two million merchant partners, two million GrabKios agents, and operating at more than 400 cities across eight countries. Based in Singapore, the company has evolved from a ride-hailing app to a Southeast Asian super app that offers several consumer services including food delivery and financial services such as e-wallet.

Other fintech companies that plan to go public are Affirm, Gojek, and Coinbase. Affirm, which provides buy now pay later (BNPL) scheme for online shopping, is expected to go public this year. Gojek is in advanced discussion to merge with Tokopedia, an Indonesian technology company specialising in e-commerce. The merged entity plans to go public via a SPAC this year. Coinbase, a cryptocurrency trading platform, will soon open for public trading.

Altimeter agreed to a three-year lock-up period for its sponsor shares

Part of the deal requires Altimeter to put $750 million into the company which represents about one-fifth of the new funds raised. It has also committed up to $500 million to a contingent investment to be equal to the aggregate dollar amount of redemptions from Altimeter’s shareholders.

Altimeter, which manages $15 billion of assets, has agreed to a three-year lock-up of their stock as part of its long-term commitment with Grab. It is also donating 10% of its sponsor shares to support the GrabForGood fund which aims to introduce programmes with long-term social and environmental impact.

Tan founded Grab in his native Malaysia as a taxi-hailing app in 2012. Grab later relocated to Singapore and expanded as a ride-hailing app in Indonesia, Vietnam, the Philippines, Cambodia, and Myanmar. With more than $10 billion raised from investors led by SoftBank over eight funding rounds, Grab became Southeast Asia’s largest ride-hailing provider before expanding into food delivery, digital payments and financial services across eight countries in the region.