Southeast Asian giant Grab announced Tuesday that it will be launched through a SPAC merger with Altimeter Growth Corp., in a deal that values the company at $ 39.6 billion, the merger of blank checks plus great so far.
Grab says he intends to appear on the Nasdaq with the symbol “GRAB” after the deal ends.
SPACs, or special-purpose acquisition companies, are shell-type companies or blank check companies created with the goal of raising capital to acquire private companies. An SPAC listing avoids the traditional Wall Street IPO process.
As part of the mega-deal, Grab, backed by SoftBank, will receive about $ 4.5 billion in cash, which includes $ 4 billion in a private investment in public capital (PIPE), managed by BlackRock, Fidelity, T. Rowe Price , Global Counterpoint by Morgan Stanley. and Singapore’s Temasek sovereign wealth fund. PIPEs are mechanisms for companies to obtain capital from a select group of investors that make their final market debut possible through their financing.
Grab, last number 16 on last year’s CNBC Disruptor 50 list, offers a range of digital services such as transportation, food delivery, hotel reservations, online banking, mobile payments and insurance from its application. The Singapore-based company has operations 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, they are also gaining strength in Asia with six SPAC companies focused on the region that have raised $ 2.7 billion so far in 2021.
But in the first quarter of this year, capital raised by companies with blank checks like Altimeter has already surpassed the full 2020 issue. Not only has the U.S. Securities and Exchange Commission caught the eye, but so have investors who fear a market bubble.
However, new offerings continue to flood the market: more than 100 in March alone, according to SPAC Research.
While the Grab merger remains a record, Boston-based biotech company Ginkgo Bioworks, which ranks No. 44 on last year’s CNBC Disruptor 50 list, is thought to be considering a merger of its own. $ 20 billion equal, according to Bloomberg. .
Throughout the pandemic, Southeast Asia experienced an increase in the use of digital services such as e-commerce, food delivery and online payment. As many as 40 million people in six countries in the region (Singapore, Malaysia, Indonesia, the Philippines, Vietnam and Thailand) went online for the first time in 2020, according to a report by Google, Temasek Holdings and Bain & Company.
However, Covid-19 has forced regional private market debacle (emerging companies valued at more than $ 10 billion) to reduce staff and rethink what will define a suite of services on demand dominant “super app”. The competitive landscape has also intensified in an already saturated market that has proved difficult to make a profit.
After a period of intense and expensive competition from Uber to dominate car sharing in many markets, Indonesian rival Gojek sold the Southeast Asian business to Grab three years ago in exchange for Uber receiving a stake in the company.
In January, Reuters reported that Grab’s net revenue had grown 70% year-over-year, recovering to pre-pandemic levels, with its highly prestigious business in all operating markets, including the largest, Indonesia .
Grab and Gojek were reportedly about to end their own merger late last year.
Reuters reported that Gojek, who ranks 10th on last year’s CNBC Disruptor 50 list, 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 the United States.