Singapore-headquartered ride-hailing unicorn Grab is exploring the option of raising capital for its e-scooter rental unit GrabWheels separately, DEALSTREETASIA has learnt.
We had reported in March that Grab had explored a similar move for its financial services unit, Grab Financial, and held talks with Alibaba’s Ant Financial for a capital infusion. TechCrunch later reported that the company had also fielded interest from US payments giant PayPal.
Grab CEO Anthony Tan eventually confirmed in May to The Financial Times that the Southeast Asian startup was indeed considering such a move for both its payments and financial services unit. with a spinoff likely “at a later date”.
The potential fundraising being mulled for GrabWheels is being driven more by strategic reasons than financial ones, an executive aware of the development told us.
“Grab is looking to rope in a strategic investor such as an OEM or a technology partner that can help it run the e-scooter business,” an industry executive aware of the development said.
In several Southeast Asian cities, Grab feels that its e-scooter arm can offer last-mile connectivity – from taxi/MRT and bus stations to homes and offices – and can also be used for intra-city transport is business districts and residential areas. It can also become a key part of its food delivery unit, GrabFood, and grocery delivery unit, GrabFresh. Grab has also picked up a stake in grocery delivery startup HappyFresh, which can also utilise the e-scooter services.
In this, Grab is adopting a different approach than peers Lyft and Uber in the US that have been picking up stakes in e-scooter companies themselves. The Southeast Asian startup is of the view that it can build out this division with strategic partners, who have an equity stake in the business, rather than buying startups in this space.
DEALSTREETASIA has reached out to Grab for comment.
Plans for the GrabWheels fundraising are at an early stage still and ultimately depend on interest from takers for the deal. If it comes through, it is likely to be structured similar to the unicorn’s deal with Thai retail behemoth Central Group, where the latter invested in Grab’s local unit, instead of at the holding company level.
Central had in January this year confirmed that it had picked up a minority stake in Grab Thailand for $200 million. The move allowed Central to tap Grab’s ride-hailing, food delivery and payments services in the country, while giving Grab access to Central’s wide retail network to entrench its services more deeply in the market.
GrabWheels is a relatively new vertical under Grab Ventures, its venture building arm. It launched the beta version of its service last November at the National University of Singapore’s (NUS) Kent Ridge campus. Last month, GrabWheels launched a subscription plan for its food delivery partners in Singapore, citing strong interest from GrabFood’s merchant partners.
GrabWheels has rolled out its services in Indonesia too. Last month, Grab announced a partnership with Indonesian real estate conglomerate Sinar Mas Group to offer e-scooter rentals in one of the township cities, Bumi Serpong Damai in Tangerang, Banten.