If you could buy an Asian monopoly stock like Ant group at 13$ would you? Meet GRAB

Headlines over “The biggest SPAC deal ever” are going around in the last two days. Which SPAC deal is this and why is it the biggest ever, we are about to find out.

Grab, is Southeast Asia’s most valuable startup that will go public in a merger with a blank-cheque company at a valuation of about $35 billion.

Summary

  • The biggest SPAC merger ever is valued at $35 billion with Grab going public through Altimeter Growth 1 (AGC).
  • The company started as an Uber-like company it has now expand in food delivery, courier services, financial services, digital payments, and was granted a digital bank license from Singapore.
  • Grab was founded in 2012 by Anthony Tan and Tan Hooi Ling and has raised $12 billion since its inception however it still remains unprofitable just like Airbnb and others.

 

About the Grab Merger with AGC

According to a report from The Financial Times, the Singaporean-based company, Grab is in talks to go public via a SPAC merger with Altimeter Growth 1 (AGC). What is more, Grab will raise about $2.5 billion in total financing from the private investment in public equity (PIPE) with $1.2 billion coming from Altimeter Growth 1. However, the figures are still subject to change, The Financial Times added.

The deal is especially notable because it is coming from Asia and not from the US which is a region underrepresented on the stock market”, one banker said.

About Grab

Grab was founded in 2012 by Anthony Tan and Tan Hooi Ling and has raised $12 billion since its inception however it still remains unprofitable, just like Airbnb and many others. It is a multinational ride-hailing company that except for transportation, also offers food delivery and digital payments services by a mobile app.

The app for transportation assigns taxis and private hires to nearby commuters through a location sharing system. Each time the company expands to a different country they buy the smartphones for the drivers and the drivers pay daily installments for the phone. Grab is taking a booking fee of about 20%. It currently offers access to Taiwan, Malaysia, South Japan, Thailand, Vietnam, Indonesia and others with more than 655 million people.

grab-company

Grab started as an Uber-like company from two friends in Harvard University before expanding into food delivery and financial services including payments, loans and insurance.

Today, its biggest rival is another Southeast Asian company that plans to go public, Gojek. The company is based in Indonesia and is in talks to merge with e-commerce company Tokopedia.

The company said in a January update that its revenue grew about 70% in 2020 compared to the previous year with its ride-hailing business breaking even in all of its operating markets.

Grab’s services

In November 2016, it launched its GrabPay payment service among third-party merchants and in December 2016 it launched its GrabRewards reward program.

In April 2017, the company announced the purchase of Indonesian online payment startup Kudo.

In May 2018, it launched its GrabFood, food delivery service and GrabExpress courier service. And its services do not end here. In 2018, it further developed a financial department that offers payment, insurance, and financial services.

Furthermore, In November 2018, Grab invested in Indonesian conglomerate Lippo Group’s Ovo platform to compete against rival Gojek. Ovo is Indonesia’s leading digital e-payment platform. In December 2018, Grab launched the GrabClub subscription program.

In December 2020, Grab was granted a digital bank license from Singapore together with Singtel as a consortium that would allow Grab-Singtel to expand its financial services offerings.

In January 2021, Grab Financial Group, the company’s financial services unit, raised more than $300 million from South Korea’s Hanwha Asset Management.

So now I am thinking, this company is going public through a merger deal that will give it a price valuation of $35 billion at $10 per share (SPAC starting prices) for a company like Alibaba? Well, I am in!

Altimeter logo

About Altimeter Growth

Altimeter Growth is a Silicon Valley-based firm that manages more than $15 billion in private and public tech investments. It has raised more than $850 million with two SPACs. The company has also raised capital for deals including UK-based firm Cazoo and online lender SoFi. Altimeter invested in Snowflake in 2015 with a 15.1 percent stake in the company and made $4.4 billion when it went listed in New York last year.

Bottom Line

The largest valuation we have heard of in a SPAC merger so far was a $10 billion valuation from eToro a few weeks ago. Grab is coming out with a valuation of $35 billion which is more than triple. It actually has a number of very impressive services expansion and I will surely keep an eye on further news.

Disclaimer – I/we have no position in any stock mentioned. I wrote this article myself, and it expresses my personal opinions. I am not receiving any compensation for it, other than FDGT Academy. I do not have or had in the past any business relationship with any company that is mentioned in the above article.

Natalia C. - Junior Analyst at FDGT Academy

Natalia C. - Junior Analyst at FDGT Academy

I am a stock analyst/investor with prior experience and knowledge to BSc Accounting and Finance. After completing my degree and exposure to the accounting firms I decided that the direction I should choose is towards the Investment world. I completed my masters in Investment Management where it gave me solid fundamentals to build my career on. I have examined a lot of different aspects of investment, from REITS, derivatives, currencies, bonds, equity and hedge funds. I never stopped learning about the market which is why I can analyze and write articles for FDGT community always personally opinionated. My passion are green energy and electric vehicles stocks as a whole. I also had my share of analyzing the work form home stocks that are coming to take over in the upcoming years.