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Apart from raising more capital through a public offering, Grab is expected to raise extra capital from private investors.
Southeast Asian ride-hailing giant Grab Holdings Inc, formerly MyTeksi, is set to go for an IPO through a merger with a Silicon Valley-based Special Purpose Acquisition Company (SPAC), affiliated to Altimeter Capital Management, LP. According to people familiar with the matter as reported by WSJ, the deal is expected to value Grab at $40 billion.
Notably, the Special Purpose Acquisition Company (SPAC), which has been associated with Altimeter Capital Management, LP, has not been specifically named as the firm has two open-shell companies. The two SPACs founded and funded by Altimeter Capital Management, LP are Altimeter Growth Corp and Altimeter Growth Corp 2.
Grab, which dominated Southeast Asia by outpacing Uber Technologies Inc (NYSE: UBER) a few years ago, is seeking to widen its market venture in different places. Different businesses around the world are shifting their working model to fit in with the coronavirus-related lifestyle. With the social distancing needed to prevent coronavirus spread, especially in places where the vaccine has not been rolled out widely, Grab needed to restructure to remain profitable.
Fundamental Aspects Affecting Grab ahead of IPO
Apart from raising more capital through a public offering, Grab is expected to raise extra capital from private investors. Reportedly, Grab could raise between $3 billion and $4 billion via a PIPE (private investment in public equity) deal.
Grab has diversified into other business models including food delivery, vehicle rental, online hotel reservations, insurance, and also digital payment platforms services. These extra services have given Grab a competitive edge among other ride-hailing applications, particularly in Singapore.
Besides, Grab won customers’ reception in larger Southeast Asia through the trust over other providers. Back then when Uber was struggling with cases of sexual harassment, a lot of customers migrated to Grab for security reasons.
Grab is, however, facing fierce competition from online travel platform Traveloka. Reportedly, Traveloka is said to be in talks to go public via a SPAC merger in the United States later this year.
Big money from notable investors is now being directed to technology-related industries. Companies that have significantly invested in artificial intelligence and show a great sense of future growth prospects amid the coronavirus crisis have attracted more investors.
Grab currently operates in Singapore, Malaysia, Cambodia, Indonesia, Myanmar, Philippines, Thailand, Vietnam and Japan. The company has in the past been involved in different series of fundings. One of the major investors is SoftBank Corp. Whereby back in December 2014, Grab raised $250 million from SoftBank Group in Series D funding. Besides, SoftBank Group also participated in Series F funding back in September 2016 that managed to raise $750 million. The company has significantly monetized its popularity in Southeast Asia and soon expects to venture into other global markets.