Grab will be made public in a $ 40 billion SPAC deal, the largest on record

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

It’s more than double the roughly $ 16 billion the company was last valued at, and would be the largest deal with SPAC or a blank check company, according to Dealogic. The previous SPAC record was held by United Wholesale Mortgage, a U.S. home loan provider, which fetched a valuation of $ 18.3 billion last fall, according to the data provider.

Under the deal, Grab raises more than $ 4 billion in cash from investors such as Fidelity, BlackRock, T. Rowe Price, Abu Dhabi Sovereign Wealth Fund, Mubadala, and Singapore government investment branch Temasek . U.S. investment firm Altimeter Capital is contributing $ 750 million.

Take plans to start trading on the NASDAQ with the “GRAB” symbol in the coming months.

SPAC frenzy sign

SPACs are shell companies with or without limited operating assets. They are usually made public only to raise money from investors who are then used to buy existing companies.

No slowdown is observed for IPOs or SPACs

These firms used to be mocked on Wall Street, but over the past year they have taken off globally. More than 310 were already launched in 2021, surpassing last year’s 257, according to Refinitiv data. They raised nearly $ 93 billion during the first quarter of this year alone.

Grab is the latest big name to be combined with a SPAC as a means to make it public. Recently, a large number of major companies have opted to take the same route to the market, including Playboy, DraftKings and electric vehicle startups Nikola and Arrival.

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

Billionaires and celebrities are looking for a part of the action by setting up their own SPAC. 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, took part in the event.
But the boom is increasingly drawing the attention of regulators like the Securities and Exchange Commission. The agency has warned that everyday investors should not throw their money behind SPACs just because there is a celebrity tied up, and on Monday indicated that it would increase the examination of SPAC accounting practices.

Grab’s way forward

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

He noted, for example, that shares acquired by Altimeter will be subject to a three-year lock-in period, which he said is 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 wanted to take advantage of its base of larger investors.

“For us, listing in the U.S. is important because it gives us access to the world’s broadest liquidity base,” he told CNN Business in an interview Tuesday.

“At the same time, we’re still exploring alternatives to see if we can make a simultaneous list locally as well, and these are existing conversations we’re exploring.”

Grab was founded by Tan and another Malay businessman Anthony Tan in 2012 and quickly shot to become the most valuable private company in Southeast Asia. It acquired Uber’s Southeast Asian business in 2018 and has since expanded into several other services, including food delivery, digital payments and even financial services.
In recent years, the firm has set out to launch itself as a provider of a “super-application”, allowing users to do everything from booking trips to taking out insurance and loans. Its business expanded to reach more than 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 deal, Grab had already raised more than $ 10 billion from a list of heavyweight investors, including the Japanese conglomerate SoftBank (SFTBF) and Chinese firm Didi Chuxing, which plans to confidentially present its own IPO in New York in the coming weeks, according to a person familiar with the subject.

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

– Julia Horowitz contributed the information.

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