Grab set for US IPO in $39B merger deal

Southeast Asian mobile platform has inked a merger deal with Altimeter Growth in what is touted to be the biggest US equity offering, at $39.6 billion, and is preparing a public listing on Nasdaq in "coming months".

Grab Holdings has inked a merger deal that is touted to be the biggest US equity offering, clocking at an estimated $39.6 billion, including $4.5 billion cash proceeds. The deal also paves the way for the Southeast Asian mobile platform's much-anticipated public listing, which is expected to take place "in coming months".

Singapore-based Grab confirmed plans for the IPO in a statement Tuesday, revealing that securities from its merger with Altimeter Growth would list on Nasdaq under the ticker "GRAB". 

Grab said the decision to list was fuelled by the company's robust financial performance last year, when it chalked up $12.5 billion in gross merchandise value, bypassing pre-pandemic figures. Starting out as a ride-sharing operator, the company's service portfolio had since expanded to include food delivery, digital wallets, and other fintech services such as insurance. 

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It was amongst digital commerce players that saw growing demand for their services in the past year, with consumers across Southeast Asia moving online as the COVID-19 pandemic ravaged. Some 40 million in the region logged on for the first time in 2020, up from 10 million in 2019, and 94% was expected to continue using at least one digital service after COVID-19 was contained, according to the 2020 e-Conomy SEA report. The outbreak also helped the e-commerce sector clock a 63% growth rate to ring in $62 billion, up from $38 billion last year. 

The spike in new users pushed the Southeast Asian online population to 400 million, with 36% or one in three having begun using a new online service this year due to COVID-19. A large number of new online users hailed from non-metropolitan areas in Malaysia, Indonesia, and the Philippines, the report noted. 

Citing figures from Euromonitor, Grab said its total addressable market was projected to expand from $52 billion last year to at least $180 billion by 2025. These market segments included ride-hailing, online food delivery, and digital wallet. 

Under the merger agreement, Grab and Altimeter would become wholly-owned subsidiaries of a new holding company, which was expected to have an equity value on a pro-forma basis of $39.6 billion. 

Altimeter is a special purpose acquisition company (SPAC), which has no commercial operations and is typically created to raise capital--through an IPO--to acquire existing businesses. SPACs also are commonly called blank check companies. 

The merger deal would see more than $4 billion paid out to a private investment in public equity (PIPE), which would include funds and accounts managed by Singapore's state-owned wealth fund Temasek Holdings, BlackRock, Morgan Stanley's Counterpoint Global, and Fidelity. 

Grab's co-founder and group CEO Anthony Tan said: "It gives us immense pride to represent Southeast Asia in the global public markets. This is a milestone in our journey to open up access for everyone to benefit from the digital economy. This is even more critical as our region recovers from COVID-19. It was very challenging for us, too, but it taught us immensely about the resiliency of our business. Our diversified superapp strategy helped our driver-partners pivot to deliveries and enabled us to deliver growth while improving profitability."

As part of the deal, Altimeter committed to a three-year lockup period for its sponsor promote shares, of which 10% would go to GrabForGood Fund to facilitate social and environmental programmes.

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