Grab to accelerate investments in mapping, fintech, says CEO Anthony Tan

Photo: Grab

Singapore tech group Grab will accelerate its investment in technologies with some of the $4.5 billion it raised by listing in the U.S. on Thursday, its chief executive said.

Grab’s shares were volatile in early trading on Nasdaq after it completed its merger with the special purpose acquisition company Altimeter Growth Corp. They were up around 4% at 10 a.m. New York time, valuing the company at $45 billion.

In an interview with Nikkei Asia, co-founder and CEO Anthony Tan said one focus of its accelerated investments will be mapping, or the creation of detailed digital maps of Grab’s operating areas, including pickup points for its ride-hailing services. The maps will help make transport and delivery services more efficient.

With respect to the groundswell of regulatory pressure on global tech companies, Tan said Southeast Asian economies differ from the more advanced ones in the U.S. and Europe, and that his company has more collaborative relationships with local authorities.

Here are edited excerpts from the interview, which took place on Thursday in Singapore before the U.S. market opened.

Q: What kind of technologies will Grab be investing in over the next decade?

A: No. 1 is mapping. We invest in mapping because it’s a very local technology: Local technology on the drivers’ side, merchants’ side and consumers’ side gives us an edge versus other peers. No. 2 is how to deliver groceries more efficiently for our partners and for all consumers.

[We will also invest in] digital banking and all our financial services, whether it is GrabPay [e-wallet], lending or “buy now, pay later.” All of that is built on a technology that can scale across countries. That’s why we’re one of the few companies out there who have such a comprehensive suite of financial service licenses right across the region.

Tan says Grab can invest in growth and maintain cost discipline at the same time. (Photo by Kentaro Iwamoto)

Q: Will you continue to operate only in Southeast Asia even though public market investors might expect growth beyond the region?

A: We say internally, “Why do we want to go out when everyone’s trying to come into Southeast Asia?” The penetration rate [of digital services] is still very early. It’s really “minute one of day one” for us, there’s so much opportunity, so much growth here.

If we can build the most efficient, lowest cost, on-demand delivery network across all Southeast Asia, that will help a lot of MSMEs (micro, small, medium enterprises) rise. We believe we are building the financial core infrastructure of the future, such as digital banking. [This] will help other people rise, help all MSMEs rise. That, to me, is a very exciting, huge opportunity. And by building a core infrastructure, we will rise with Southeast Asia.

Q: Grab in September downgraded its earnings projections for this year due to the impact of COVID-19. Will you be able to achieve positive EBITDA (earnings before interest, tax, depreciation and amortization) in 2023 as you had planned?

A: It was at the height of Vietnam lockdowns. And we want to make sure that when there’s near-term uncertainty, be conservative, be transparent and build trust. That’s why we did it. What we are seeing is the business is tracking well. The mobility numbers have come back.

So when we think about the path to profitability, we don’t think about just profitability or growth. They’re not mutually exclusive. All in all, we see investment into growth while having the cost discipline as a public company.

Q: Grab is still paying a lot in the form of incentives for customers, drivers and merchants. Is this sustainable?

A: I think you feel there are lots of promotions, but still [we have] industry-leading margins. For food delivery, the majority of our markets are break-even in terms of EBITDA. So I think that is the focus. How do you grow and how do you still have cost discipline? That, to us, is the most important.

Q: One of the problems that U.S. tech companies have now is an anti-competition backlash, as they have so much power. If Grab successfully acquires the Southeast Asian market, would you face the same problem?

A: [The] regulatory environment in Southeast Asia is very different from the U.S. and Europe. If you look at Grab’s driver-partners, before joining Grab, four out of 10 didn’t even have jobs, didn’t even have an income. Today they do. We helped over a million of them.

What is the problem that the governments want to solve? The problem they want to solve is [not enough] job creation. Helping MSMEs digitize, promoting financial inclusion. We do our very best to partner with them to solve these local problems. We helped the Malaysian government to disperse COVID relief money to the population. We worked with the Indonesian government for vaccination centers. So our whole approach with the regulatory environment is to work very collaboratively, co-create to solve the local problems.

Q: Grab management owns Class B shares, which are entitled to 45 votes each, resulting in control of 60% of voting rights despite about 3% ownership. Why did you want such disproportionate voting power, and how will you ensure Grab has the right corporate governance?

A: We believe that, regardless of short-time [market] pressures, the voting helps us stay very focused on a double bottom line and on our long-term mission and strategy, which is a super app strategy.

We have a very strong executive committee where power is really distributed to make decisions. And we try to empower a lot of our leaders to make decisions. We also have a majority independent board, which ensures good governance. I think passing the U.S. SEC (Securities and Exchange Commission) levels of compliance and governance, that is very thorough, is another good endorsement.

This article was first published in Nikkei 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.

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.