Singapore-based Grab is making it official with the IPO plan. The largest ride-hailing and food delivery company in Southeast Asia will be merging with special-purpose acquisition company (SPAC) Altimeter Growth Corp for a coveted US listing.
Grab signs the biggest blank-check company merger ever with its IPO
According to Reuters, the partnership between Grab Holdings and Altimeter Growth Corp secured a valuation of nearly $40 billion. Investors from almost every part of the world are lining up to participate in private investment in a public equity offering. Some of them are Temasek Holdings, BlackRock, Fidelity International, Abu Dhabi’s Mubadala and Malaysia’s Permodalan Nasional Bhd. Altimeter Capital will further lead the investment with $750 million funds being managed.
Additionally, the deal involving the two companies boosts the sell firms frenzy on Wall Street. Reuters noted that shell firms have racked up $99 billion in the United States by April 2021. The record alone has outnumbered 2020’s record at $83 billion.
Grab has been showing immense growth. Last year, the company’s value went just over $16 billion. Consequently, the success benefitted its early backers, such as Softbank Group Corp and China’s Didi Chuxing, a lot.
Following the merger, both Altimeter Growth and Grab will become fully-owned subsidiaries of a new holding company. This new company is expected to achieve $39.6 billion in values on an initial proforma equity basis. Grab will also receive around $4.5 billion in cash proceeds from the transactions. Currently, the boards of Grab and Altimeter have approved the deals and are aiming to close them by July.
Behind the decision to go public
Grab’s strong financial performance is a big decision-maker on the public listing decision. Its co-founder, Anthony Tan, commenced with an aggressive strategy to tap growth in new sectors. Localisation of Grab’s services and investment in high-growth economies also helped the company ramped up its market share.
Tan further explained to Reuters the company’s plan regarding the funds’ allocation. Tan plans to use the funds in doubling down the last-mile delivery network as well as bulking up its financial services business. Digital bank and mobile payments are some of the choices.
Noted from Reuters, Grab has been exploring a US listing since January. The reason for the decision, said Tan, is because of its “depth, it is highly liquid, it is large with global names, global investors”.
Upon Grab’s public listing in the US, founder and CEO of Altimeter, Brad Gerstner, said ot be viewing the opportunity positively. Quoted from Reuters, Gerstner said, “Southeast Asia is one of the fastest growing digital economies in the world, with a population approximately twice the size of the United States. Yet online penetration for food delivery, on-demand mobility and electronic transactions are a fraction of the U.S. and China”.