Grab to Go Public in Record-Breaking $40B SPAC Merger

Southeast Asia’s ride-hailing giant and leading ‘super-app’ Grab Holdings Inc. announced Tuesday that it would go public on the Nasdaq Stock Market by merging with a special-purpose acquisition company, securing a near-$40 billion valuation in a new milestone for the SPAC backed by Altimeter Capital boom that has swept U.S. financial markets and Grab plans to start trading on the NASDAQ under ticker symbol “GRAB” in the coming months.

The $39.6 billion deal to list Grab, a ride-hailing, food-delivery, and digital-wallet group that operates across much of Southeast Asia, is by far the biggest involving a blank-check company and means Grab’s valuation has more than doubled in just 18 months. The merger also comes alongside a $4 billion-plus fundraising, which is the largest-ever share sale by a Southeast Asian company in the U.S.

What are SPACs?

Well, to answer that in simplicity; SPACs are shell companies with limited or no operating assets, which usually go public solely to raise money and buy existing businesses. These firms used to be sneered at on Wall Street but have taken off in a big way over the past year and Grab is the latest big name to hop on the SPAC bandwagon. Recently, a slew of major companies have chosen to take the same route to market, including Playboy, DraftKings, and electric vehicle startups Nikola and Arrival. Billionaires such as Richard Branson and Peter Thiel have gotten in on the action, too, by setting up SPACs.

Though Grab on Tuesday pointed out that this current deal is a reverse merger so it’s unlike other such deals. It pointed out, for instance, that the shares acquired by Altimeter will be subject to a three-year lockup period, which it said is significantly longer than similar transactions and highlighted confidence in the startup’s long-term potential.

In a recent interview Grab Co-founder Tan Hooi Ling was asked why the firm chose to go public in the United States, rather than in Southeast Asia, and she reiterated that the company wanted to tap into its larger investor base. “For us, the US listing is important because it gives us access to the widest global base of liquidity, at the same time, we’re still exploring alternatives on whether we can do a concurrent listing locally as well, and those are still existing conversations that we’re exploring.”

Grab

Grab was founded by Tan and fellow Malaysian entrepreneur Anthony Tan in 2012, and quickly soared to become Southeast Asia’s most valuable private company. It acquired Uber’s Southeast Asia business in 2018 and has since expanded into a variety of other services, including food delivery, digital payments, and even financial services. In recent years, the firm has set out to cast itself as the provider of a “super-app,” letting users do everything from booking rides to taking out insurance and loans and its business swelled to reach over 25 million monthly active users across nearly 430 cities in eight countries.

According to Altimeter Capital CEO Brad Gerstner, the company is comparable to a mashup of “Uber plus DoorDash plus Ant Financial, all in a single app.” Prior to the SPAC deal, Grab had already raised more than $10 billion from a roster of heavyweight investors, including Japanese conglomerate SoftBank and Chinese ride-hailing firm Didi Chuxing, which is planning to file confidentially for its own IPO in New York in the coming weeks, according to a person familiar with the matter. Grab has also been a winner of the coronavirus crisis. Last year, its gross merchandise 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.