Shares of Southeast Asian technology giant Grab rose 18.5% on its US market debut on Thursday, opening at $13 per share but fell during the rest of the day, closing 20.5% lower at $8.75.
Grab went public on Thursday morning eastern time on the NASDAQ under the ticker GRAB following its record $40-billion merger with special purpose acquisition company Altimeter Growth Corp. Grab became only the second SE Asian tech major to go public in the US.
To celebrate its listing, Grab’s co-founders Anthony Tan and Hooi Ling Tan rang the Nasdaq opening bell on Thursday from the Shangri-La Hotel in Singapore’s Orchard district, joined by employees, as well as its drivers and merchants.
In his opening address to the crowd of around 250, Anthony Tan said its listing “shine[s] a spotlight on Southeast Asia and how its homegrown tech companies are powering new possibilities for the region’s 660 million people”.
Founded in 2012, Grab has evolved from being an on-demand ride-hailing player to a provider offering multiple services under one app that includes food delivery and mobile payment. Apart from its headquarters in Singapore, Grab is also present in Malaysia, Indonesia, Vietnam, Thailand, the Philippines, Cambodia and Myanmar.
Its $40-billion listing marked the world’s largest SPAC deal, which had originally been scheduled for July but pushed back till now as it had to work on a financial audit of its accounts for the past three years.
Grab will receive $4.5 billion through the deal including a $4-billion private investment in public equity, led by $750 million from funds managed by Altimeter Capital Management.
Hit by Covid-19 Delta variant curbs across Southeast Asia, particularly in Vietnam, Grab’s revenue in the third quarter was down 9% year-on-year to $157 million. Its net loss stood at $988 million for the three months ending September, against a net loss of $621 million in the same period last year.
Post-merger, Anthony Tan will gain 60.4% of voting rights on a 3.3% ownership stake with Hooi Ling Tan and Grab president Ming Maa.
In an interview with Nikkei Asia ahead of the listing, Anthony Tan said the choice to hold the majority of voting rights “helps us stay very focused on a double bottom line and on our long-term mission and strategy.”
He said the company plans to use a part of the $4.5-billion cash proceeds to fund its mapping, groceries, and fintech developments.
And despite incentives to customers, merchants, and drivers, Grab’s food delivery arm is nearing breakeven levels based on EBITDA calculations, he said.
“The listing [is] a great milestone [but] obviously we are operating in a backdrop that is quite volatile,” GGV Capital’s managing partner Jixun Foo told DealStreetAsia, referring to the current stock market that has been affected by inflation and Omicron concerns. The NASDAQ composite fell by 2.7% from a week ago.
“But I think we still have to come back to fundamentals. At the end of the day, Grab…has to focus on the fundamental of creating value to the end-user,” said Foo, who led the venture capital firm’s investment in Grab in 2014.
The company’s performance will be closely watched as a benchmark for how other Southeast Asian tech companies could do and be valued.
On whether Grab’s profitability will weigh on its performance, Foo said investors will be focused on how individual business units do, instead of its overall results.
“Because there are areas you want to invest and where you want to continue to put more capital, especially on the R&D side. That’s where it’ll continue to burn capital, but those on a more longer-term basis will be okay,” Foo said, adding that companies like Meituan and Amazon took a long time to be profitable but had been able to demonstrate growth and positive contribution margins.
Grab’s financial services arm may provide value in the long run, but adoption takes time and Grab’s fintech arm is still small, he pointed out.
Grab rival Sea Limited became the SE Asian tech giant to list in the US on the New York Stock Exchange in October 2017. Shares of the gaming and e-commerce company rose 22-fold from its debut to its peak at the start of November but have since dropped by more than 27% to close at $261.81 on Wednesday evening.
Indonesia’s GoTo is also readying for a listing early next year and has raised at least $1.3 billion in its pre-IPO round so far. It expects to raise up to $2 billion.