Southeast Asian ride-hailing and payments giant Grab has secured $2 billion for its first senior secured term loan facility, making it the largest term loan B facility in the Asian technology sector, according to an announcement Monday.
The amount raised was higher than the initial $750 million that Grab had targeted for the five-year senior secured loan. The company attributed the upsizing of the debut term loan to commitments from international institutional investors. Grab CEO and co-founder Anthony Tan said the app continues to make “consistent progress in achieving our growth and sustainability milestones”.
DealStreetAsia had earlier reported that the loan will be a revolving credit facility with a three- or five-year tenor and a 5-6% interest rate. A revolving loan is a flexible financing tool due to its repayment and re-borrowing accommodations, allowing a business to borrow money as needed for working capital needs and continuing operations.
Grab said the term loan will further enhance the company’s position as it continues to strengthen its super app ecosystem. It will also allow Grab to diversify its finances.
The interest rate on the loan was lowered by 100 basis points from the original launch guidance to LIBOR + 450 basis points, Grab said. LIBOR, or the London inter-bank offered rate is the benchmark interest rate at which major global banks lend to one another.
Moody’s Investors Services and S&P Global Ratings issued ratings of B3 and B-, with a stable outlook, respectively on Grab’s term loan.
The term loan facility, however, is not a first for Grab. In 2017, the company secured $700 million in debt financing, including a $500 million five-year asset-backed syndicated facility from HSBC Singapore.
The deal was 2.5 times oversubscribed, with 16 banks and non-bank financial institutions participating.
The successful close of the term loan facility comes as Grab is reportedly exploring a listing in the US this year. Sources interviewed by Reuters said the IPO could raise at least $2 billion, making it the largest overseas share offering by a company minted in Southeast Asia.
The term loan also comes as a confidence booster for Grab, which wants to show it can continue to raise capital as analysts point to the setbacks it could face in certain markets. For one, merger talks with the Indonesian ride-hailing rival Gojek have been called off, which could put a dent in Grab’s broader ambitions for Southeast Asia.