The Biggest SPAC Deal Ever
Grab will merge with Altimeter in a business deal that values the company at $39.6 billion, the company said in a press release today. Last year, Grab was valued at about $16 billion, meaning its business value more than doubled as the COVID-19 pandemic yielded a surge in demand for food delivery services.
This way, the rideshare business marks two records — the largest SPAC deal ever, as well as the largest-ever US equity offering by a Southeast Asian company.
“Our diversified superapp strategy helped our driver-partners pivot to deliveries, and enabled us to deliver growth while improving profitability. As we become a publicly-traded company, we’ll work even harder to create economic empowerment for our communities, because when Southeast Asia succeeds, Grab succeeds,” Anthony Tan, the CEO and co-founder of the startup business said in a statement.
The Singapore-based business will receive $4 billion through a private investment in public equity (PIPE), while the SPAC deal will provide the startup company with around $4.5 billion in cash proceeds. Out of the allocated $4 billion via PIPE, $750 million will come from funds managed by Altimeter Capital Management, LP.
Other investors for the rideshare and delivery business include some of the world’s largest private equity funds, including BlackRock, Counterpoint Global (Morgan Stanley Investment Management), T.Rowe Price Associates, Fidelity, and others.
“As one of the world’s largest and fastest-growing internet companies, Grab is paving the digital path forward for the 670 million citizens of Southeast Asia,” Brad Gerstner, founder and CEO of Altimeter, said.
Grab is operating in two emerging business sectors: food delivery and mobility. The startup company is projecting that its total addressable market (TAM) will grow from about $52 billion in 2020 to over $180 billion by 2025.
The rideshare business accelerated its path toward becoming the publicly-listed company after it recorded a gross merchandise volume (GMV) of $12.5 billion last year, which is higher than the pre-pandemic levels, as well as more than double than what the business posted in 2018. Many emerging businesses opt for a quicker and cheaper SPAC deal than the traditional initial public offering (IPO).
Grab is considered the most valuable startup in Southeast Asia as it controls about 72% of the rideshare business sector, 50% of GMV for online food delivery, and even 23% of regional total payment value (TPV) for digital wallet payments. Startup Savant reported in January that Grab raised $300 million for its rapidly growing fintech startup business Grab Financial Group (GFG).
“Grab’s listing provides a much-awaited exit for existing investors, meanwhile, providing exciting opportunities for U.S. investors to invest in Southeast Asia growth companies. This should accelerate investors’ attention and hence, more listings should be expected,” said Kerry Goh, chief investment officer at Kamet Capital Partners.
Similar to Uber, the Singapore-based business has yet to become profitable. This milestone is expected to be achieved before the end of the year.
Grab, a Singapore-based startup that operates in the rideshare and food delivery business sectors, announced the largest ever SPAC deal with Altimeter that values the company at $39.6 billion.
About the Author
Mariliana has an MSC in Consumer Analytics and Business Strategy. She has a special interest in fast-moving industries and Big Data.