Grab completes SPAC merger, sees volatile trading debut

Shareholders in Altimeter Growth Corp, the $450 million SPAC launched last year by Altimeter Capital, approved the merger on November 30. The stock, which surpassed $18 last month in anticipation of the deal before falling back to $11, climbed rapidly in early trading on December 2, peaking at $13.06. It then slumped to $8.75 as SPAC investors redeemed their positions.

Grab’s merger is the largest completed with a SPAC globally and the first out of Southeast Asia, with real estate portal PropertyGuru and consumer credit platform Kredivo set to follow. However, investor sentiment on SPACs has weakened considerably as the year has progressed. Most SPACs are trading below their IPO prices, including those that have completed mergers in 2021.

Grab’s merger was accompanied by a $4 billion PIPE, led by Altimeter, which committed $750 million. Other investors include BlackRock, Morgan Stanley Investment Management, T.Rowe Price, Fidelity, Janus Henderson Investors, Mubadala Investment, Nuveen, Permodalan Nasional, Temasek Holdings, and K3 Ventures. Indonesian family groups like Djarum and Sinar Mas also took part.

The PIPE investors have taken a 10.2% stake in the merged entity. Existing investors in Grab – who have rolled over positions worth $34.3 billion – own 87.7%. Anthony Tan, Grab’s co-founder and CEO, has 2.2% but retains majority voting control, while the SPAC sponsor holds 0.3%.

The transaction gives Grab an equity valuation of $39.6 billion and will leave the company with approximately $4.5 billion in balance sheet cash to support growth. The forward enterprise value to net revenue multiple is 9.6x, based on projected revenue for 2022 of $3.27 billion.

Grab raised nearly $10 billion in private funding across eight rounds. SoftBank Vision Fund, Tiger Global Management, Hillhouse Capital, Coatue Management, China Investment Corporation, GGV Capital, and Vertex Ventures are among its backers. The company is also supported by strategic players such as Didi Chuxing, Uber, Toyota, Honda, and Hyundai.

Grab’s services have expanded from ride-hailing into food and grocery delivery and last-mile logistics. It also offers an array of financial services, from electronic payments to insurance to investment products. The financial services unit was spun out into a separate entity earlier this year.

Grab operates in more than 400 cities and towns across eight countries, and claims 25 million monthly transacting users, five million registered driver partners, two million merchant partners, and two million kiosk owners and agents. A total of 1.9 billion transactions were completed across the platform last year, with gross merchandise value (GMV) reaching $12.5 billion.

The company expects GMV to reach $34.2 billion in 2023, while adjusted net revenue hits $4.5 billion, up from $1.6 billion in 2020. Contribution profit – defined as adjusted net revenue minus various direct costs – came to $100 million last year compared to a loss of $1.2 billion in 2019.

EBITDA was still negative, though the deficit narrowed to $800 million in 2020 from $2.3 billion in 2019. Contribution profit and EBTIDA are projected to hit $1.7 billion and $500 million in 2023.

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• Topics
• Southeast Asia
• IPO
• Technology
• PIPEs
• Consumer
• Grab
• SPAC
• Softbank
• TMT
• Transportation
• Didi Chuxing
• Coatue Management
• Hillhouse Capital Management
• Vertex Holdings
• Tiger Global Management
• GGV Capital