Southeast Asian giant Grab announced on Tuesday that it will be released through a SPAC merger with Altimeter Growth Corp., in a deal that values the company at $ 39.6 billion – the largest merger with empty checks until the present.
Grab says he intends to list the Nasdaq under the symbol “GRAB” after the transaction is completed.
SPACs or special purpose purchasing companies are shell companies or blank-check companies set up for the purpose of raising capital to acquire private companies. A SPAC list bypasses the traditional Wall Street IPO process.
As part of the mega-deal, Grab, backed by SoftBank, will receive approximately $ 4.5 billion in cash, which includes $ 4 billion in a private equity investment (PIPE), managed by BlackRock, Fidelity , T. Rowe Price, Morgan Stanley’s Global Counterpoint. fund and the sovereign capital fund Temasek in Singapore. PIPEs are mechanisms for companies to raise capital from a select group of investors that make possible their final debut in the market by financing them.
Grab – the 16th most recent on CNBC’s Disruptor 50 list last year – offers a range of digital services such as transportation, food delivery, hotel reservations, online banking, mobile payments and insurance services from its app . The Singapore-based company operates in most of Southeast Asia and serves more than 187 million users in more than 350 cities in eight countries.
While SPACs have become a hot investment vehicle on Wall Street, it is also gaining ground in Asia with six SPAC companies focused on the region, which have collectively raised $ 2.7 billion so far in 2021.
But in the first quarter of this year, the capital raised by companies with blank checks, such as Altimeter, has already exceeded total emissions by 2020. Not only has it attracted the attention of the US Securities Commission, but also investors who fear a market bubble.
However, new transactions continue to flood the market – more than 100 in March alone, according to SPAC Research.
While Grab’s merger remains a record, Boston-based biotech company Ginkgo Bioworks, ranked 44th on CNBC’s Disruptor 50 last year, is thought to be considering an equally massive $ 20 billion merger. , according to Bloomberg.
During the pandemic, Southeast Asia saw an increase in the use of digital services, such as e-commerce, food delivery and online payment. Nearly 40 million people in six countries in the region – Singapore, Malaysia, Indonesia, the Philippines, Vietnam and Thailand – will go online for the first time in 2020, according to a report by Google, Temasek Holdings and Bain & Company.
However, Covid-19 forced regional private market debacle (start-ups valued at over $ 10 billion) to reduce staff and rethink what will define a dominant suite of “super applications” of on-demand services. It has also intensified the competitive landscape in an already saturated market, which has proved difficult to make a profit.
After a period of intense and costly competition from Uber to dominate rideshare in many markets, Indonesian rival Gojek sold its Southeast Asian business Grab three years ago in exchange for Uber receiving a stake in the company.
In January, Reuters reported that Grab’s net revenue had risen 70 percent year-on-year, returning to pre-pandemic levels, and its travel business has reached all operating markets, including most sea, Indonesia.
Grab and Gojek were reportedly close to completing a merger at the end of last year.
Reuters reported that Gojek – who is ranked 10th on CNBC’s Disruptor 50 list last year – is now in advanced talks with Indonesian e-commerce leader Tokopedia for a $ 18 billion merger, ahead of a potential dual listing in Jakarta and US