Alibaba said to be in talks to invest $3b in Grab

REUTERS/Aly Song

Alibaba Group Holding Ltd. is in talks to invest $3 billion into Southeast Asian ride-hailing giant Grab Holdings Inc., according to people familiar with the matter.

The Chinese e-commerce giant, a sole investor in the round, will spend a portion of the funds to acquire some of the Grab stock held by Uber Technologies Inc., one of the people said, asking not to be named as the discussions are private. The deal may represent one of Alibaba’s biggest bets on Southeast Asia since its first investment in Lazada in 2016. China’s largest corporation has previously had limited forays in ride-hailing but a potential tie-up with Grab gives it access to data on millions of users in eight countries, a growing delivery fleet as well as a stake in digital wallet and financial services.

The funding — about a fifth of Grab’s last known valuation of $14 billion — comes amid growing questions over the company’s ability to live up to its lofty price tag as it grapples with the impact of the coronavirus pandemic. Chief Executive Officer Anthony Tan said the company is facing its “single biggest crisis,” while co-founder Tan Hooi Ling warned in May of a “long winter.” Existing investors have also been frustrated by what they see as value-destroying competition with Grab’s regional arch-rival Gojek.

The world’s biggest ride-hailing companies have waged years of costly battles in each others’ territories before they agreed to stay out of each others’ core markets. The truce left Uber with considerable stakes in its rivals worth more than $9 billion, including a 23.2% stake in Grab at the end of 2018. Under the terms of a deal that Uber struck to exit Southeast Asia, Grab is on the hook for more than $2 billion to the San Francisco-based company if it doesn’t go public by mid-2023.

Masayoshi Son’s SoftBank Group Corp., an investor in all of the world’s biggest ride-hailing companies, is at the center of the discussions. The Japanese company has used its position as a major shareholder to push Uber to unload stakes in Grab, Didi Chuxing of China and Russia’s Yandex, the person said. Uber said in April it would write down about $2 billion in those investments after the coronavirus pandemic upended the ride-hailing business. Representatives of Grab declined to comment, while Uber and Softbank didn’t immediately reply to queries. Alibaba offered no immediate comment.

SoftBank has also pushed Grab to make peace with Gojek. Even as speculations about a possible merger have re-surfaced, the two are far from reaching a deal, according to people familiar with the matter. The negotiations are hampered by a hostile relationship between the two companies and the complexity of coordinating between so many investors, they said.

JPMorgan Chase & Co. is advising Grab and Goldman Sachs Group Inc. is advising Gojek, other people familiar with the matter said. One scenario discussed in the past is potentially combining only the companies’ transportation business in Indonesia, one of them said. Grab and Gojek, valued at $10 billion, are fierce rivals with an ambition to create an all-in-one “super app.” They also compete in food delivery and financial services.

Indonesia, by far the largest and the most promising market in Southeast Asia, remains the key sticking point in any potential merger, with both companies wanting a majority stake in the merged business there, according to the people. Gojek, seen as Indonesia’s national champion whose app has been downloaded most in the country, won’t be squeezed into a deal, according to another person familiar with the discussions. It has in the past denied merger speculation.

Any deal would also likely face regulatory hurdles because it would combine the top two players in the region, reducing competition in ride-hailing and newer fields like food delivery and finance.

The pandemic and lockdown measures have battered both companies, forcing them to cut jobs and streamline their businesses. Still, Gojek pulled in new capital from Facebook Inc. and PayPal Holdings Inc., a show of confidence in its efforts to create a digital payments platform in the region.

Bloomberg

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.