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Image credit: Grab

Grab confirms record-breaking $40bn SPAC deal; archrival Gojek nears $18bn merger

April 14, 2021

Grab, the Southeast Asian order-food-and-everything-else app, has confirmed earlier reports indicating it has agreed to merge with NASDAQ-listed special purpose acquisition company (SPAC) Altimeter Growth Corp.

The deal will allow Singapore-based Grab to become a publicly traded company, giving it a post-money equity valuation of approximately $39.6 billion, it said in a statement.

As part of the proposed transaction, Grab has closed a $4 billion private investment in public equity (PIPE) deal led by the SPAC’s sponsor Altimeter Capital Management.

BlackRock, Morgan Stanley‘s Counterpoint Global, T. Rowe Price, Fidelity, Janus Henderson Group, and Nuveen also participated in the PIPE round.

Alongside them were several state-linked funds – including Singapore’s Temasek, Malaysia’s Permodalan Nasional Berhad, and the UAE’s Mubadala – as well as family offices and funds linked to Indonesian conglomerates Djarum, Emtek, and Sinar Mas.

If the merger goes through, the combined company expects to raise a further $500 million on the public markets.

Grab claims to be the category leader for online food delivery, ride-hailing, and digital payments in Southeast Asia, where it is locked in fierce competition with Jakarta-based Gojek.

The two archrivals had been discussing their own potential merger last year, but Gojek has since opted to explore a combination with e-commerce player Tokopedia.

According to The Information, the Indonesian duo will put the final seal on their merger as early as this month, with a post-transaction valuation of around $18 million. The combined company is expected to rebrand as ‘Goto’ and seek a dual listing in Indonesia and an overseas market via a conventional IPO float.

‘Covid-19 taught us about resiliency of our business’

In investor presentation materials released alongside the SPAC announcement, Grab said it’s the region’s number one food delivery platform by number of deliveries, as well as the top ‘last-mile’ mobility provider when its ride-hailing and logistics services are included in the count.

Last year, it racked up $12.5 billion in gross merchandise volume (GMV) — in other words, value of goods and services transacted on its platform — while adjusted net revenue for the year stood at $1.6 billion.

In terms of profitability, Grab says it made $100 million in “contribution profit” — defined as adjusted net revenue minus ‘direct’ costs such as subsidies and marketing expenses — in 2020, while its EBITDA loss stood at $800 million.

Its deliveries business — including restaurant takeout orders and online grocery shopping — clocked $5.5 billion GMV last year, with the segment’s adjusted net revenue accounting for 15% of the company’s overall GMV.

“This is a milestone in our journey to open up access for everyone to benefit from the digital economy. This is even more critical as our region recovers from Covid-19,” Grab co-founder and group CEO Anthony Tan said in a statement.

“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’ll work even harder to create economic empowerment for our communities.”

Grab was founded in Malaysia in 2012 as an online taxi-booking service, before expanding to app-based hailing. Since then, it has expanded beyond transportation into myriad verticals; its food-related services include restaurant delivery, cloud kitchens, e-grocery, ‘dark stores,’ and B2B agent services helping small-scale food and grocery vendors to source produce and manage inventory.

Grab and Altimeter said they expect their transaction to complete “in the coming months” subject to shareholder approvals and other customary closing conditions, with the combined company trading under the ticker symbol ‘GRAB.’


Comment? News tip? Story idea? Email me at jack@agfunder.com or find me on LinkedIn and Twitter

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