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Southeast Asian ride-hailing giant Grab saw its SPAC-directed IPO debut plunge on first day of trading on the NASDAQ, to less than $9.
Grab, a Southeast Asian tech company and ride-hailing platform, had a severely underperforming IPO debut on the NASDAQ. The Singapore-headquartered company had gone public earlier on Thursday as the largest-ever to close a SPAC merger and go public. Grab merged with Altimeter Growth Corp, the special purpose acquisition company (SPAC) created by US investment firm Altimeter Capital.
Grab IPO Debut
The Southeast Asian ride-hailing giant raised $4.5 billion through this initiative, at a valuation of approximately $40 billion. However, Grab’s initial public offering (IPO) fell by over 20% from its Thursday opening debut of $13.06 to close at $8.75 per share. The company currently trades under the GRAB ticker.
Notable among Grab’s early investors are prominent Japanese organizations; multinational holding company SoftBank, and world-renowned automaker Toyota. This group also comprises South Korean car company Hyundai Motor and Chinese ride-hailing mainstay DiDi Chuxing. Through the SPAC deal, Grab generated funds from investment-oriented firms like Fidelity, BlackRock, Morgan Stanley, and T.Rowe Price Associates. In addition, government-owned investment vehicles such as Mubadala Investment Company, an Abu Dhabi sovereign wealth fund, and Temasek Holdings of the Singaporean government rounded out the group.
At the time, grab co-founder and chief executive officer Anthony Tan shared some insight into the company’s business idea. According to Tan:
“We don’t view growth and profitability as mutually exclusive. We operate in a market with a large market opportunity and low penetration across our verticals. We do believe we have a cost leadership advantage.”
Grab Business Model
Grab, which ranked 16th on the CNBC disruptor list from 2020, offers food delivery in addition to its transportation services. Founded in 2012, the Southeast Asian unicorn, also provides a suite of digital payment services via a mobile app. Some of these services include online banking, mobile payments, hotel bookings, and insurance services. Grab’s operations cover much of Southeast Asia, earning the ‘super app’ moniker. According to the company’s chief financial officer Peter Oey, Grab is “just getting started in Southeast Asia”. Oey explained that the tech company intends to reinvest the proceeds from its listing back into operations in a bid to expand quickly and even more aggressively. Oey pointed out that there were still several underdeveloped industries on home soil that Grab could continue to capitalize on. The company’s chief financial officer cited the fledgling grocery delivery services and ride-hailing industry as prime examples.
Although the ride-hailing giant caters to over 187 million users in 465 cities located in 8 countries, its revenue was down 9% year-over-year. This resulted from net losses growing from $621 million to almost a billion ($988 million).
Grab previously stated that its decision to go public in the United States instead of Southeast Asia is commercially driven. The company was hoping to access a comparatively larger investor base. However, Oey stated that Grab is still open to listing on another exchange, including one in Southeast Asia.