Grab to go public in US via merger valued at nearly US$40bn

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Grab will go public via a merger with special purpose acquisition company Altimeter Growth Corp, raising about US$4.5 billion in cash and valuing Grab's shares at US$39.6 billion. According to Grab, this is expected to be the largest-ever US equity offering by a Southeast Asian company. Pursuant to the proposed transactions, Altimeter Growth and Grab will become wholly-owned subsidiaries of a new holding company.

Grab was founded in 2012 and in 2018, the company acquired Uber's Southeast Asia operations, integrating the latter's ride-sharing and food delivery business into its multi-modal transportation and fintech platform. Since then, it has been doubling down on its efforts to become a super app, with offerings including GrabPay, GrabFood, GrabInsure, GrabRewards, and GrabExpress.

According to Grab, the decision to go public was driven by strong financial performance in 2020, despite COVID-19. The company posted a gross merchandise value (GMV) of approximately US$12.5 billion in 2020, surpassing pre-pandemic levels and more than doubling from 2018. It also claims to be the category leader in Southeast Asia for its core verticals, accounting for approximately 72% of total regional GMV for ride-hailing, 50% of total regional GMV for online food delivery and 23% of regional total payment value for digital wallet payments in 2020. Across online food delivery, ride-hailing and digital wallet payments, Grab expects its total addressable market in Southeast Asia to grow from approximately US$52 billion in 2020 to more than US$180 billion by 2025.

The combined company expects its securities will be traded on Nasdaq under the symbol “GRAB” in the coming months. In addition to the merger, Altimeter has also committed up to US$500 million to a contingent investment to be equal to the aggregate dollar amount of redemptions from Altimeter Growth’s shareholders. The proposed transactions, which have been approved by the boards of directors of both Grab and Altimeter Growth, are expected to close in the coming months, subject to shareholder approvals, and other customary closing conditions.

As part of Altimeter’s long-term commitment to Grab, Altimeter’s sponsor promote shares are subject to a three-year lock-up period. Altimeter is also donating 10% of its sponsor promote shares to support the GrabForGood fund, which aims to introduce programmes with long-term social and environmental impact, including education, financial support for underserved communities and environmental issues.

Grab announced the GrabForGood fund last week with an initial fund size of US$275 million, including a personal contribution of US$25 million in Grab shares from Grab Group CEO and co-founder Anthony Tan, together with co-founder Hooi Ling Tan and President Ming Maa.

Tan said this is a milestone in the company's journey to open up access for everyone to benefit from the digital economy. He added that this is even more critical as the region recovers from COVID-19. "It was very challenging for us too, but it taught us immensely about the resiliency of our business. Our diversified super app strategy helped our driver-partners pivot to deliveries and enabled us to deliver growth while improving profitability. As we become a publicly traded company, we will work even harder to create economic empowerment for our communities, because when Southeast Asia succeeds, Grab succeeds," he added.

According to Tan, Altimeter is investing in a way that demonstrates their aligned values. He added that this is a testament to the global investment community’s belief in the long-term value proposition of Grab’s super app strategy and the growth potential of Southeast Asia.

Meanwhile, founder and CEO of Altimeter Brad Gerstner said as one of the world’s largest and fastest-growing internet companies, Grab is paving the digital path forward for the 670 million citizens of Southeast Asia. "We are thrilled that Grab selected Altimeter Capital Markets as their partner to go public and even more excited to become sizable long term owners in this innovative, mission-driven company," he said.

Separately, rival Gojek and Indonesian eCommerce firm Tokopedia are currently seeking approval from shareholders for their proposed merger, Reuters recently reported quoting its sources. It added that the deal, which sources had previously estimated to be around US$18 billion, would be the biggest yet for Indonesia.

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