Uber’s competitor, southeast Asia’s ride hailing company Grab, has secured debt financing line of up to $700 million to build the largest car rental platform in the region by end 2018.
The debt facility, which is the largest ever raised by a Southeast Asian startup, comes along with Grab’s exclusive partnership with SMRT, Singapore’s multi-modal land transport provider to build the largest fleet in Singapore, Grab said in an announcement on Friday.
The latest financing closely follows a heavyweight funding round by Grab this year in July where the company saw Chinese ride-hailing app Didi Chuxing and Japanese heavyweight tech investor SoftBank pump $2 billion into the startup. At that time, Grab had set out to raise $2.5 billion and has said it would raise an additional $500 million.
Without disclosing the names of current debt financiers, Grab mentioned that the funding was secured from leading global and regional banks and the amount will be used to “create the largest car rental programme in Southeast Asia to meet robust demand from Grab’s driver partners in the region.”
Grab’s existing car rental business is already a critical element that aids the growth of its driver network in Southeast Asia, where car ownership is relatively low. With over 1.8 million drivers in its regional network, Grab claims to have the largest land transportation fleet in Southeast Asia, which has nearly tripled in size since January this year.
“With these debt facilities, Grab will make more cars available for rental, provide more favourable rental terms and services for driver partners, and increase the supply of vehicles on the road, making rides faster and more affordable for passengers,” the startup said.
Grab offers private car, motorbike, taxi, and carpooling services across seven countries in Southeast Asia and has a current market share of 95 per cent in third-party taxi-hailing and 72 per cent in private vehicle hailing. It is now looking to further consolidate its market lead through the largest car rental programme in Southeast Asia.
“This record-breaking debt financing round clearly demonstrates high confidence in our business model and market leadership from several of the world’s leading banks,” Ming Maa, President of Grab said.
In terms of valuations — a keenly watched number in the current Unicorn race — while Grab has not disclosed anything, according to an earlier report from Reuters the company was set to be valued at more than $6 billion at the close of the $2.5 billion funding round.
As part of the agreement with SMRT, the fleet of cars will include eco-friendly hybrid and fully electric vehicles for an improved driving experience, while drastically reducing drivers’ operating costs. It will translate into higher driver earnings and more affordable rides for passengers.
Further, Grab will have exclusive access to SMRT’s current and future taxi and private car fleet management capabilities, in addition to its entire network of taxis and Strides private-hire cars.