SoftBank-backed Grab agrees to go public in world’s largest SPAC merger

Southeast Asian giant Grab announced Tuesday that it had acquired through a SPAC merger with Altimeter Growth Corp. will go public. The company is valued at $ 39.6 billion – the largest blank check merger to date.

Grab says it intends to trade on the Nasdaq under the ticker symbol GRAB upon closing.

Special Purpose Acquisition Companies are Shell companies that were formed to raise capital for the acquisition of private companies. A SPAC listing bypasses the traditional Wall Street IPO process. Altimeter Growth’s stock rose more than 8% in premarket trading following the announcement, from its previous closing price of $ 13.95 per share.

As part of the transaction, SoftBank-Backed Grab will receive approximately $ 4.5 billion in cash, including $ 4 billion for a private investment in a public equity arrangement signed by BlackRock, Fidelity, T. Rowe Price, the Counterpoint Global fund managed by Morgan Stanley and Singapore’s state wealth fund Temasek. PIPEs are mechanisms for companies to raise capital from a select group of investors who, through their funding, make their final market debut.

“I remember years ago when we spoke to investors some people didn’t even know where Southeast Asia was on a map,” Grab co-founder and CEO Anthony Tan said on CNBC’s Squawk Box on Tuesday.

“When we announce what is expected to be the largest US equity offering in Southeast Asia today, it confirms the enormous supply here in this region and that the ‘super app’ strategy is working.”

Grab, number 16 on last year’s CNBC Disruptor 50 list, offers a variety of digital services through its app, including transportation, grocery delivery, hotel bookings, online banking, mobile payments, and insurance services – hence the title of “Super App” . The company operates in most of Southeast Asia, serving more than 187 million users in over 350 cities in eight countries.

While SPACs have become a hot investment vehicle on Wall Street, they are also gaining traction in Asia with six regionally focused SPAC companies that raised a total of $ 2.7 billion in 2021.

But in the first quarter of this year, the capital raised by blank check companies like Altimeter has already exceeded the total issuance of 2020. It has caught the attention of not only the United States Securities and Exchange Commission, but also investors who fear a market bubble.

Still, new deals continue to flood the market – more than 100 in March alone, according to SPAC Research.

“We found this was the better way to go public,” Tan said Tuesday of the decision he claims his company weighed last year. “You [Altimeter] more than 15% of our PIPE tied up, and that shows real commitment … We were able to secure a first-class day-one-cap table for all investors involved in the company.

While Grab’s merger remains record-breaking, Boston-based biotech company Ginkgo Bioworks, ranked 44th on CNBC Disruptor 50 last year, is considering an equally massive $ 20 billion blank check merger, according to Bloomberg -Dollar.

During the pandemic, Southeast Asia saw an increase in the use of digital services such as e-commerce, grocery delivery and online payments. According to a report by Google, Temasek Holdings and Bain & Company, 40 million people in six countries in the region – Singapore, Malaysia, Indonesia, the Philippines, Vietnam and Thailand – went online for the first time in 2020.

Still, Covid-19 has forced regional private market decacorns (startups valued at more than $ 10 billion). Downsizing and rethinking what constitutes a dominant super-app suite of on-demand services. It has also exacerbated the competitive landscape in an already saturated market that has proven difficult to make a profit.

After a period of intense and expensive competition from Uber for dominance in many markets, the company sold its Southeast Asia business to Grab three years ago in exchange for an interest in the company.

“Even in the toughest times during Covid, we were able to expand our driver supply to other jobs,” Tan said on Tuesday. “There is no country that accounts for more than 35% of our total sales. So this resilience and regional diversification has really helped us.”

In January, Reuters reported that Grab net sales were up 70% year over year and had rebounded to pre-pandemic levels as hail business was balanced across all operating markets, including the largest in Indonesia.

Grab and Indonesia-based rival Gojek were reportedly close to finalizing their own merger late last year.

Reuters reported last week that Gojek – which was number 10 on CNBC’s Disruptor 50 list last year – is currently with Indonesian e-commerce leader Tokopedia via a $ 18 billion merger, ahead of a potential double listing is in advanced talks in Jakarta and the USA

Pending shareholder approval, this deal could be completed in the “next few weeks,” according to a source familiar with the matter.

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