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Southeast Asia’s Grab Slumps in US Debut After Record SPAC Deal

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 in eight countries


Grab
Grab CEO Anthony Tan and co-founder Tan Hooi Ling clap as they attend the Grab Bell Ringing Ceremony at a hotel in Singapore, on December 2, 2021. Photo: Reuters

 

Shares in Grab, Southeast Asia’s biggest ride-hailing and delivery firm, slid more than 20% in their Nasdaq debut on Thursday following the company’s record $40 billion merger with a blank-cheque company.

Grab’s shares rose as much as 21% just minutes after the listing before retreating to trade 23% lower at $8.51.

“The price makes no difference to me,” chief executive Anthony Tan said. “I’m going to celebrate tonight and get back to work tomorrow.”

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.

Grab kicked off the biggest US listing by a Southeast Asian company with a bell-ringing event in Singapore, hosted by Nasdaq and Grab’s executives.

Signature Green

The event was attended by about 250 people including its investors, drivers, merchants and employees, with many dressed in the company’s signature green.

Thunderous handclaps reverberated in the hotel ballroom as an emotional Tan thanked them for putting Grab and Southeast Asia’s tech economy on the global map.

Tan and Tan Hooi Ling developed the company from an idea for a Harvard Business School venture competition in 2011. The two Tans are not related.

The listing comes after Grab’s April agreement to merge with US tech investor Altimeter Capital Management’s SPAC, Altimeter Growth Corporation and raise $4.5 billion, including $750 million from Altimeter.

Grab’s flotation “will provide a bigger cash buffer” to its “cash burn”, S&P Global Ratings said in a note.

But it said 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.”

Internet Economy

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

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

“Longer term, we’re really excited about Grab Financial Group,” said Chris Conforti, partner at Altimeter Capital, referring to Grab’s financial services unit. “I think the bell curve on that is much wider in terms of what the outcome could be, but it could be extremely large.”

Grab expanded into a regional operation with a range of 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. “We can compete and win.”

 

Payday Bonanza

Tan, the CEO, will control 60.4% of voting rights along with Grab’s co-founder and president Ming Maa, but hold 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, which invested as early as 2014.

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

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

Third-quarter revenue fell 9% from a year earlier and its adjusted loss before interest, taxes, depreciation, and amortisation (Ebitda) widened 66% to $212 million. It aims to turn 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.

 

  • Reuters with additional editing by Kevin Hamlin

 

 

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Kevin Hamlin

Kevin Hamlin is a financial journalist with more than 40 years of experience covering Asia. Before joining Asia Financial, Kevin worked for Bloomberg News, spending 12 years as Senior China Economy Reporter in Beijing. Prior to that, he was Asia Bureau Chief of Institutional Investor for ten years.

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