Grab Financial Group, the financial arm of Southeast Asian ride-hailing and food delivery major Grab, has raised more than $300 million in a round led by South Korea’s Hanwha Asset Management, according to a report by The Information.
The South Korean investment firm is the latest in a string of potential investors expressing interest to join the $500-million targeted round which has struggled to close for more than a year.
DealStreetAsia first reported back in March 2019 that Grab was in talks with Alibaba’s Ant Group to invest solely in the decacorn’s financial services arm. Since then, it has been reported that strategic investors such as PayPal, Prudential and AIA have thrown their hat into the ring.
The firm, however, has struggled to finalise the $500-million round despite strong global investor interest. Grab Financial, led by longtime senior executive Reuben Lai, has struggled to delink the proposition value for its financial arm from the wider group entity whose transactions in ride-hailing, food delivery and logistics it ultimately depends on.
One source close to Grab Financial told DealStreetAsia that the firm is also considering a Special Acquisition Purpose Vehicle (SPAC) to raise funds, which may be a speedier and more effective fundraising mechanism compared to private markets.
So far, Grab has been more successful in fundraising at the group level, having secured nearly $10 billion to date since 2014. Last September, reports surfaced about Alibaba writing a $3-billion cheque for Grab. The round has yet to materialise.
A flurry of events around Alibaba has unraveled since. Ant Group was forced to pull its record-breaking IPO in November. Chinese regulators continue to hunker down on Alibaba, with recent talks about forcing it to divest its investments to fragment the Chinese giant’s clout over the internet economy.
Meanwhile, rating agencies Moody’s and S&P Global reports published early this week highlighted the significant liquidity sitting in Grab’s coffers. According to Moody’s, this amounts to $3.2 billion in unrestricted cash and cash equivalents as of 30 September 2020, with a commitment by Grab to fund the growth of its financial services arm wholly with equity. The losses and cash burn, however, are still projected to persist all through 2023.
Further capital may still be required to keep up in Southeast Asia given that merger talks between Gojek and Tokopedia are understood to be serious, according to multiple sources. This has shifted the circumstances for Grab, whose discussions to merge with Gojek have reportedly given way.
DealStreetAsia has reached out to Hanwha Asset Management for comment. Grab declined to comment on this story.
