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A woman uses her phone near a sign for the online ride-hailing service Grab at the Manggarai train station in Jakarta, Indonesia. Picture: REUTERS/AGOES RUDIANTO
A woman uses her phone near a sign for the online ride-hailing service Grab at the Manggarai train station in Jakarta, Indonesia. Picture: REUTERS/AGOES RUDIANTO

Singapore — Grab Holdings, Southeast Asia’s biggest ride-hailing and delivery firm, makes its market debut on Thursday after a record $40bn merger with a special purpose acquisition company (SPAC), in a listing that will set the tone for other regional offerings.

The backdoor listing on Nasdaq marks the high point for the nine-year-old Singapore company that began as a ride-hailing app and now operates across 465 cities in eight countries, offering food deliveries, payments, insurance and investment products.

The biggest US listing by a Southeast Asian company follows Grab’s April agreement to merge with US tech investor Altimeter Capital Management’s SPAC, Altimeter Growth Corp, and raise $4.5bn, including $750m from Altimeter.

There is scope for many competitors in the fragmented food delivery and financial services markets in Southeast Asia, a region of 650-million people, but the road to profitability could be a long one, analysts say.

Grab’s flotation “will provide a bigger cash buffer” to its “cash burn”, S&P Global Ratings said in a note. But the company’s “credit quality continues to be constrained by its loss-making operations, and free operating cash flows could be negative over the next 12 months”.

Southeast Asia’s internet economy is forecast to double to $360bn in gross merchandise value by 2025, prompting Grab’s rivals, including regional internet firm Sea and Indonesia's GoTo Group, to bulk up.

GoTo plans a local IPO in 2022 after completing an expected $2bn private fundraising, sources have told Reuters. A US listing will follow the Jakarta offering.

“Longer term, we’re really excited about Grab Financial Group [a unit of the company],” said Chris Conforti, partner at Altimeter Capital.

Bonanza for backers

Grab was founded by CEO Anthony Tan and Tan Hooi Ling, who developed the firm from an idea for a Harvard Business School competition in 2011. The two Tans aren’t related.

CEO Tan, 39, expanded Grab into a regional operation with various services, after launching it as a taxi app in Malaysia in 2012. It later moved its headquarters to Singapore.

“What we have shown to the world is that home-grown tech companies can develop great technology that can compete globally, even when international players are in town,” Tan said in an interview on Wednesday.

He will end up with 60.4% voting rights along with Grab’s co-founder and president Ming Maa, but control only a 3.3% stake with them.

Grab’s listing brings a payday bonanza to early backers such as Japan’s SoftBank and Chinese ride-hailing giant Didi Chuxing, which invested as early as 2014.

They were later joined by the likes of Toyota, Microsoft and Japanese megabank MUFG. Uber became a Grab shareholder in 2018 after selling its Southeast Asian business to Grab after a five-year battle.

In September, Grab cut its full-year adjusted net sales forecasts, citing renewed uncertainty about pandemic-induced curbs on movement.

Third-quarter revenue fell 9% from a year earlier and its adjusted loss before interest, taxes, depreciation, and amortisation widened 66% to $212mn.

Grabs aims to become profitable on an Ebitda basis in 2023.

JPMorgan and Morgan Stanley were the lead placement agents on the fundraising, while Evercore and UBS were the co-placement agents.



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