Southeast Asia’s Grab Holdings on Tuesday officially agreed to merge with a special purpose acquisition company (SPAC) backed by Altimeter Capital Management in a deal that values the ride-hailing and food delivery giant at approximately $39.6 billion.
The merger with Altimeter Growth Corp, the biggest blank-check company deal ever, paves the way for Grab, a SoftBank-backed technology group, to go public in the US, in what will be the largest-ever US equity offering by a Southeast Asian company, Grab said in a statement.
The proposed transaction, which values Grab at about $39.6 billion, includes a more than $4 billion private investment in public equity (PIPE) deal by investors including BlackRock, Counterpoint Global (Morgan Stanley Investment Management), Fidelity International, Janus Henderson Investors, T.Rowe Price Associates, Mubadala, Nuveen, Permodalan Nasional Berhad and Temasek Holdings. Other participants in the PIPE include family groups from Indonesia such as Djarum, the Sariaatmadja family, and Sinar Mas.
Funds managed by Altimeter Capital will lead the PIPE deal with an investment of $750 million.
A PIPE deal involves the selling of publicly traded common shares to private investors at a discounted price.
Grab group CEO and co-founder Anthony Tan describes the merger and the planned IPO as a “milestone in our journey to open access for everyone to benefit from the digital economy”.
“As we become a publicly-traded company, we’ll work even harder to create economic empowerment for our communities, because when Southeast Asia succeeds, Grab succeeds,” he added.
The company said the deal will provide it with approximately $4.5 billion in cash proceeds. The Southeast Asian firm has so far raised $12 billion and has about $5 billion in cash reserves, putting its private valuation at more than $16 billion, according to a Financial Times report.
Furthermore, Altimeter has also committed up to $500 million to a contingent investment to be equal to the aggregate dollar amount of redemptions from Altimeter Growth’s shareholders.
It is also donating 10% of its sponsor promote shares to support the GrabForGood fund, which aims to introduce programs with long-term social and environmental impact, including education, financial support for underserved communities, and environmental issues.
“We are thrilled that Grab selected Altimeter Capital Markets as their partner to go public and even more excited to become sizable long-term owners in this innovative, mission-driven company,” said Altimeter founder and CEO Brad Gerstner.
Grab’s journey to becoming a public company listed in the US will be facilitated by a definitive business combination agreement with Altimeter Growth Corp 1, a SPAC backed by Silicon Valley-based venture capital firm Altimeter Capital. Altimeter Growth Corp 1 raised $450 million in 2020.
The combined company expects its securities to be traded on NASDAQ under the symbol “GRAB” in the coming months.
The proposed transactions, which have been approved by the boards of directors of both Grab and Altimeter Growth, are expected to close in the coming months, subject to shareholder approvals, and other customary closing conditions.
Grab’s decision to become a public company was driven by what it describes as a “strong financial performance” in 2020, despite the COVID-19 pandemic. The company posted GMV of approximately $12.5 billion last year, surpassing pre-pandemic levels and more than doubling from 2018.
Grab’s listing plans via the SPAC route come after talks to merge with Indonesian ride-hailing rival Gojek fell through last year. Following the collapse of talks, Gojek entered into merger discussions with Indonesian e-commerce giant, Tokopedia, instead.
Gojek and Tokopedia are likely to head for a traditional IPO if merger talks are successful.
Meanwhile, Indonesian unicorn Traveloka is in advanced talks to list in the US through a merger with Bridgetown Holdings Ltd, a SPAC backed by billionaires Richard Li and Peter Thiel, DealStreetAsia reported late last week. A SPAC listing at this point when Traveloka’s business has nearly returned to pre-COVID levels could see the company commanding a valuation of around $5 billion.
Grab’s SPAC merger and its plan to list comes amidst a spate of recent IPO and SPAC announcements centering on Southeast Asia’s internet unicorns, signaling a growing urgency to raise more capital.
SPACs are blank cheque companies formed only to raise capital to acquire other businesses. They typically acquire firms as quickly as four to five months and are given up to two years to seek targets. If they cannot fulfill that mandate, they will have to return all the money to the public shareholders.
Global SPACs have raised as much as $24.26 billion in January 2021 alone. The total amount raised by SPACs in 2020 was $79 billion, according to data compiled by DealStreetAsia.
In Southeast Asia, the biggest SPAC is Bridgetown Holdings, which is backed by Hong Kong tycoon Richard Li and venture capitalist Peter Thiel. The blank cheque company raised $595 million.