PE-backed Grab to buy Uber's Southeast Asia operation

Uber’s ridesharing and food delivery businesses in Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam will be integrated into the Grab platform. As part of the acquisition, Uber will take a 27.5% stake in Grab and CEO Dara Khosrowshahi will join the Southeast Asian company’s board.

As of January, Grab was in the process of raising what is expected to be a $2.5 billion Series G round, which would take its total disclosed funding above $3.9 billion and bring its valuation to a reported $6 billion. SoftBank and Didi committed $2 billion last year and strategic partners such as Hyundai and Toyota have since confirmed their participation.

Grab is involved in an expensive battle for market share with Go-Jek in Indonesia and Uber in the wider Southeast Asia region. Acquiring the latter’s regional business promises to ease the pressure and capital burn somewhat. Go-Jek closed a $1.5 billion Series E round earlier this year at a post-deal valuation of more than $5 billion.

“Today’s acquisition marks the beginning of a new era. The combined business is the leader in platform and cost efficiency in the region. Together with Uber, we are now in an even better position to fulfil our promise to out-serve our customers. Their trust in us as a transport brand allows us to look towards the next step as a company: improving people’s lives through food, payments and financial services,” Anthony Tan, CEO and co-founder of Grab, said in a statement.

The company’s immediate plans are to take GrabFood, which currently operates in Indonesia and Thailand, into Singapore and Malaysia following integration with Uber Eats. It will also continue to develop its core transport offering – recent announcements include a bicycle-sharing service and a shuttle bus service for popular bus routes – and build out a financial services portfolio that currently covers mobile payments, microfinance, and insurance.

The Grab app has been downloaded onto more than 90 million mobile devices and over five million people are said to use the platform every day. The company – founded in 2012 – claims to have Southeast Asia’s largest land transportation fleet and agent network, with more than five million drivers and agents across 195 cities in eight countries. Transport services include private cars, motorbikes, taxis, and carpooling services, in addition to food and package delivery services.

SoftBank and Didi have committed multiple investments in Grab between them, along with backers such as Tiger Global Management, China Investment Corporation, GGV Capital and Vertex Ventures. Last October, the company secured $700 million in debt funding from leading global and regional banks, which was earmarked for expansion of its car rental fleet.

Didi’s acquisition of the Uber China operation ended an equally bruising contest for market share. Uber received a 5.89% stake in the combined entity with preferred equity, which equated to a 17.7% economic interest in Didi. Existing Uber China investors, which included Baidu and HNA Group, got a 2.3% stake in the new business. The transaction valued Didi at $35 billion.

Last December, the Chinese company raised a $4 billion round at a valuation of $56 billion. Uber – which has faced a string of controversies in the last year as well as the departure of co-founder Travis Kalanick as CEO – recently completed a secondary share transaction with SoftBank at a valuation of $48 billion. The Japanese conglomerate also committed fresh capital at a higher valuation.

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• Topics
• Southeast Asia
• Technology
• Buyouts
• TMT
• Transportation
• M&A
• Softbank
• Grab