Southeast Asian giant Grab announced Tuesday that it had acquired through a SPAC merger with Altimeter Growth Corp. will go public. The company is valued at $ 39.6 billion – the largest blank check merger to date.
Grab says it intends to trade on the Nasdaq under the ticker symbol “GRAB” when the deal is closed.
SPACs, or special-purpose acquisition companies, are shell companies or blank check companies established for the purpose of raising capital for the acquisition of private companies. A SPAC listing bypasses the traditional Wall Street IPO process.
As part of the mega-deal, SoftBank-Backed Grab will receive approximately $ 4.5 billion in cash, including $ 4 billion for a private investment in public equity (PIPE) made by BlackRock, Fidelity, T. Rowe Price and Morgan Stanley’s Counterpoint Global fund and Singapore’s sovereign wealth fund Temasek. PIPEs are mechanisms for companies to raise capital from a select group of investors who, through their funding, make their final market debut.
Grab – most recently at number 16 on CNBC Disruptor 50 last year – offers a variety of digital services through its app, including transportation, grocery delivery, hotel bookings, online banking, mobile payments, and insurance services. The Singapore-based company operates across most of Southeast Asia, serving more than 187 million users in over 350 cities in eight countries.
While SPACs have become a hot investment vehicle on Wall Street, they are also gaining traction in Asia with six regionally focused SPAC companies that raised a total of $ 2.7 billion in 2021.
But in the first quarter of this year, the capital raised by blank check companies like Altimeter has already exceeded the total issuance of 2020. This has caught the attention not only of the US Securities and Exchange Commission, but also of investors who fear a market bubble.
Still, new deals continue to flood the market – more than 100 in March alone, according to SPAC Research.
While Grab’s merger remains record-breaking, Boston-based biotech company Ginkgo Bioworks, ranked 44th on CNBC Disruptor 50 last year, is considering an equally massive $ 20 billion merger of blank checks, according to Bloomberg U.S. dollar .
During the pandemic, Southeast Asia saw an increase in the use of digital services such as e-commerce, grocery delivery and online payment. According to a report by Google, Temasek Holdings and Bain & Company, 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.
Still, Covid-19 has forced regional private market decacorns (startups valued at more than $ 10 billion). Downsizing and rethinking what constitutes a dominant “super-app” suite of on-demand services. It has also exacerbated the competitive landscape in an already saturated market that has proven difficult to make a profit.
After a period of intense and expensive competition from Uber for dominance in many markets, Indonesian rival Gojek sold its Southeast Asia business to Grab three years ago in exchange for Uber getting a stake in the company.
In January, Reuters reported that Grab net sales were up 70% year over year and had rebounded to pre-pandemic levels as hail business was balanced across all operating markets, including the largest in Indonesia.
Grab and Gojek were reportedly close to finalizing their own merger late last year.
Reuters reported that Gojek – which ranked 10th on CNBC’s Disruptor 50 list last year – is currently in advanced talks with Indonesian e-commerce leader Tokopedia about a $ 18 billion merger before it hits Jakarta and the USA comes to a possible double listing