Grab is announced in a $ 40 billion SPAC deal, the largest ever recorded

Grab is announced in a $ 40 billion SPAC deal, the largest ever recorded

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The startup in Singapore announced on Tuesday that it would merge with a specialty acquisition company, or SPAC, backed by Altimeter Capital in a deal that would pave the way for a listing in New York and a value of Grab at about $ 39 , 6 billion.

This is more than twice the approximately $ 16 billion that the firm was last privately valued at, and would, according to Dealogic, be the largest transaction ever with a SPAC, or blankcheck company. The previous SPAC record was held by United Wholesale Mortgage, a US home loan provider, which, according to the data provider, reached a valuation of $ 18.3 billion last year.

Under the deal, Grab is raising more than $ 4 billion in cash from investors, including Fidelity, BlackRock, T. Rowe Price, the Abu Dhabi Sovereign Wealth Fund Mubadala and the Singapore government investment arm Temasek. US investment firm Altimeter Capital is raising $ 750 million.

Grab plans to start trading on the NASDAQ in the coming months under the symbol “GRAB”.

Sign of SPAC madness

SPACs are tracking companies with limited or no current assets. Usually they are only raised publicly to raise money from investors who are then used to buy existing businesses.

No slowdown is visible for IPOs or SPACs

These companies used to shrink on Wall Street, but have risen sharply worldwide in recent years. More than 310 have already been launched in 2021, which according to Refinitiv’s data already beat a total of 257 last year. During the first quarter of this year alone, they raised nearly $ 93 billion.

Grab is the latest big name merged with a SPAC as a way to become public. Recently, a bunch of big companies have chosen to take the same route to the market, including Playboy, DraftKings and the launch of electric vehicles Nikola and Arrival.

According to Refinitiv, 110 SPAC combinations worth $ 232 billion were announced during the first three months of the year.

Billionaires and celebrities are looking for a piece of the action by setting up their own SPACs. Richard Branson and Peter Thiel, as well as athletes like Alex Rodriguez and Colin Kaepernick, pop star Ciara, investor Bill Ackman and former White House economic adviser Larry Kudlow all came into play.
But the boom is increasingly attracting the attention of regulators such as the Securities and Exchange Commission. The agency warned that everyday investors should not throw their money behind SPACs just because there is a celebrity, and indicated on Monday that it would increase the investigation into SPAC accounting practices.

Grab your way forward

Grab said Tuesday that its reverse merger is unlike any other such deal.

It pointed out, for example, that the shares acquired by Altimeter were subject to a period of three years, which he said was significantly longer than similar transactions and that it would emphasize confidence in the long-term potential of the company.

Asked why the company chose to publish in the United States rather than Southeast Asia, Tan Hooi Ling, co-founder of Grab, said the company wants to leverage its larger investor base.

“For us, the U.S. listing is important because it gives us access to the largest global liquidity base,” she said in an interview with CNN Business on Tuesday.

“At the same time, we are still exploring alternatives or we can also do a concurrent list locally, and it is still existing discussions that we are exploring.”

Grab was founded by Tan and fellow Malaysian entrepreneur Anthony Tan in 2012, and quickly skyrocketed to become Southeast Asia’s most valuable private company. It acquired Uber’s business in Southeast Asia in 2018 and has since expanded into a variety of other services, including food delivery, digital payments and even financial services.
Over the past few years, the firm has set out to present itself as the provider of a ‘super-app’, which allows users to do everything from bookings to insurance and loans. Its business has grown to more than 25 million active users per month in nearly 430 cities in eight countries.

According to Brad Gerstner, CEO of Altimeter Capital, the company can be compared to ‘Uber plus DoorDash plus Ant Financial, all in a single app’.

Prior to the SPAC agreement, Grab had already raised more than $ 10 billion from a roster of heavyweight investors, including the Japanese conglomerate. Soft bank (SFTBF) According to a person familiar with the matter, and the Chinese firm Didi Chuxing, who in the coming weeks wants to confidentially apply for his own scholarship in New York.

Grab was also a winner of the coronavirus crisis. Last year, gross trade value, a measure of sales, reached $ 12.5 billion, according to the company, higher than pre-pandemic levels.

– Julia Horowitz reported.

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