South Asia’s giant giant Grab announced on Tuesday that it has merged with Altimeter Growth Corp. through a SPAC merger. will disclose, in a deal that the company values at $ 39.6 billion – the largest merger to date.
Grab says he plans to list on the Nasdaq under the symbol “GRAB” after completing the deal.
SPACs, or special purpose acquisition companies, are shell companies or blank check companies set up to raise capital to acquire private companies. A SPAC listing bypasses the traditional IPO process of Wall Street.
As part of the mega-deal, SoftBank-backed Grab will receive approximately $ 4.5 billion in cash, which includes $ 4 billion in private equity investment (PIPE), managed by BlackRock, Fidelity, T. Rowe Price, Morgan Stanley’s Counterpoint Global fund and the sovereign fund Temasek of Singapore. PIPEs are mechanisms for companies to raise capital from a select group of investors that make the final debut in the market possible through their financing.
Grab – which recently ranked 16th on the CNBC Disruptor 50 list – provides a range of digital services such as transportation, food delivery, hotel reservations, online banking, mobile payments and insurance services from within its app. The company in Singapore operates in most of Southeast Asia and serves more than 187 million users in more than 350 cities in eight countries.
While SPACs have become an excellent investment tool on Wall Street, they are also rising in Asia with six regional SPAC companies raising $ 2.7 billion so far in 2021.
But in the first quarter of this year, the capital raised by blank-check companies like Altimeter exceeded the total 2020 issuance. It has not only caught the attention of the US Securities and Exchange Commission, but also investors who are afraid of a market bubble.
According to SPAC Research, the new transactions still dominate the market – more than 100 in March alone.
While the merger of Grab remains a record series, Ginkgo Bioworks, Boston-based biotechnology company, will be at no. 44 on the CNBC Disruptor 50 list last year, according to Bloomberg, according to him considering an equally large merger of $ 20 billion. .
During the pandemic, Southeast Asia saw an increase in the use of digital services such as e-commerce, food delivery and online payment. Some 40 million people in six countries across 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.
Yet Covid-19 has forced local private market decorum (forced enterprises worth more than $ 10 billion). to cut staff and rethink what will define a dominant ‘super-app’ range of on-demand services. It has also strengthened the competitive landscape in an already saturated market, which is difficult to make a profit.
After a period of intense and costly competition by Uber to dominate the shares in many markets, Indonesian competitor Gojek sold his business in Southeast Asia to Grab three years ago in exchange for Uber acquiring a stake in the company. .
In January, Reuters reported that Grab’s net income grew by 70% year-on-year and recovered to pre-pandemic levels, with its business operations equal in all operating markets, including the largest Indonesia.
Grab and Gojek were reportedly close to the end of their own merger late last year.
Reuters reported that Gojek – who is the no. 10 is on the CNBC Disruptor 50 list from last year – now in advanced talks with Indonesian e-commerce leader Tokopedia for a $ 18 billion merger, ahead of a possible double listing in Jakarta and the US.