Grab goes public in a $ 40 billion SPAC transaction, the largest record

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The Singapore-based startup announced Tuesday that it will merge with a special-purpose purchasing company, or SPAC, backed by Altimeter Capital, in a deal that would pave the way for a New York listing and capitalize on Grab at about $ 39.6 billion.

This is more than double the approximately $ 16 billion the company was last privately valued and would mark the largest deal ever with a SPAC or a blank check company, according to Dealogic. SPAC’s previous record was held by United Wholesale Mortgage, a US home loan provider, which was valued at $ 18.3 billion last fall, according to the data provider.

As part of the deal, Grab is raising more than $ 4 billion in cash from investors, including Fidelity, BlackRock, T. Rowe Price, Abu Dhabi Mubadala Sovereign Wealth Fund and Singapore Temasek government investment arm. The American investment company Altimeter Capital attracts 750 million dollars.

Make plans to start trading on the NASDAQ under the “GRAB” symbol in the coming months.

Sign of SPAC frenzy

SPACs are shell companies with or without limited operational assets. Usually, they become public only to raise money from investors, who are then used to buy existing business.

No slowdown in sight for IPOs or SPACs

These companies used to be mocked on Wall Street, but have taken off globally in the last year. More than 310 have already been launched in 2021, already exceeding the total amount of 257 last year, according to Refinitiv data. They raised nearly $ 93 billion in the first quarter of this year alone.

Grab is the latest big name to merge with a SPAC as a means of becoming public. Recently, a lot of major companies have chosen to take the same path to the market, including Playboy, DraftKings and electric vehicle startups Nikola and Arrival.

According to Refinitiv, 110 SPAC combinations worth $ 232 billion were announced in the first three months of the year.

Billionaires and celebrities are looking for a part of the action by creating their own SPACs. Richard Branson and Peter Thiel, as well as athletes such as Alex Rodriguez and Colin Kaepernick, pop star Ciara, investor Bill Ackman and former White House economic adviser Larry Kudlow, attended the event.
But the boom is attracting more and more attention from regulators such as the Securities and Exchange Commission. The agency warned that everyday investors should not throw their money behind SPACs just because there is a celebrity attached, and on Monday indicated that it will step up control of SPAC’s accounting practices.

Grab the way forward

Grab said Tuesday that its reverse merger is different from other such transactions.

He pointed out, for example, that the shares acquired by Altimeter would be subject to a three-year lock-in period, which he said was significantly longer than similar transactions, and highlighted confidence in the startup’s long-term potential.

Asked why the company chose to go public in the United States, rather than in Southeast Asia, Grab co-founder Tan Hooi Ling said the company wants to enter its larger investor base.

“For us, listing in the United States is important because it gives us access to the largest global liquidity base,” she told CNN Business in an interview on Tuesday.

“At the same time, we are still exploring alternatives to making a simultaneous list locally, and these are still existing conversations that we are exploring.”

Grab was founded by Tan and his fellow Malaysians Anthony Tan in 2012 and quickly rose to become the most valuable private company in Southeast Asia. It acquired the Uber business in Southeast Asia in 2018 and has since expanded into a variety of other services, including food delivery, digital payments and even financial services.
In recent years, the company aims to break free as a provider of a “super-application”, allowing users to do anything from booking rides to taking out insurance and loans. Its business has grown to reach over 25 million monthly active users in nearly 430 cities in eight countries.

The company is comparable to a mashup of “Uber plus DoorDash plus Ant Financial, all in one app,” according to Altimeter Capital CEO Brad Gerstner.

Prior to the SPAC agreement, Grab had already raised more than $ 10 billion from a list of heavy investors, including the Japanese conglomerate. SoftBank (SFTBF) and Chinese firm Didi Chuxing, which plans to confidentially file its own IPO in New York in the coming weeks, according to someone familiar with the matter.

Grab was also a winner of the coronavirus crisis. Last year, its gross commodity value, a measure of sales, reached $ 12.5 billion, higher than the pre-pandemic level and more than double that of 2018, according to the company.

– Julia Horowitz contributed to the reporting.

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