Grab, the superapp that made Uber quit Southeast Asia, to go public through controversial 'SPAC'
(2021/04/14)
- Reference: 1618383668
- News link: https://www.theregister.co.uk/2021/04/14/grab_goes_public_through_spac/
- Source link:
Singaporean superapp Grab announced yesterday that it plans to go public in the United States – through a $39.6bn merger with a Special Purpose Acquisition Company (SPAC).
The [1]company cited its strong financial performance despite COVID-19 as the reason to become a public company.
[2]
Grab said in 2020 that it accounted for 72 per cent of total regional ride-hailing gross merchandise value (GMV), 50 per cent of total regional online food delivery, and 23 per cent of total regional digital wallet payments. The company's GMV in 2020 was $12.5bn, more than double that number from two years ago.
Originally a single-country taxi-hailing app started in 2012, the superapp now operates in eight Southeast Asian nations and has added food and grocery delivery, payments, e-wallets, hotel booking, insurance, and even lending services to its app.
[3]
Grab made itself more than useful during COVID-19 lockdowns when consumers needed deliveries and online services, and the unemployed became more open to taking jobs in the gig economy.
Despite the COVID-era success, the company did [4]lay off 5 per cent of its workforce in June 2020. At the time, CEO Anthony Tan said the layoffs were unavoidable, despite cutting costs and focusing more resources on delivery services.
Uber’s Asian outpost wins Singaporean banking licence [5]READ MORE
Grab is so dominant in its home markets that Uber [6]sold its Southeast Asia operations to Grab in 2018 rather than compete. Uber retained a 27.5 per cent stake in that unit.
The SPAC involved in Grab's stock-market debut, Altimeter Growth, will alongside Grab become wholly owned subsidiaries of a new holding company with a pro-forma equity value of approximately $39.6bn.
Grab said:
At closing, the combined company is expected to receive approximately US$4.5 billion in cash proceeds, including more than US$4bn from a fully committed PIPE offering that was upsized due to significant investor interest.
SPACs are controversial because they have no commercial operations and exist solely to raise capital through an IPO, then use the cash for acquisitions that get all the benefits of public ownership without having to go through the investor and regulatory scrutiny required to float.
Some experts therefore regard SPACs as with a dose of [7]suspicion .
Investors in the Altimeter Growth/Grab mashup may not care: they'll be getting exposure to Southeast Asia's emerging markets and youthful, fast-growing population.
[8]
Once the new entity lists on NASDAQ in coming months it will trade with the symbol GRAB. ®
Get our [9]Tech Resources
[1] https://www.grab.com/sg/press/others/grab-go-public-in-partnership-with-altimeter/
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YHa9Pf09bd0RoSzlkw34pAAAAJI&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YHa9Pf09bd0RoSzlkw34pAAAAJI&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[4] https://www.theregister.com/2020/06/16/grab_job_cuts/
[5] https://www.theregister.com/2020/12/07/ubers_asian_outpost_wins_singaporean/
[6] https://www.grab.com/sg/press/business/grab-merges-with-uber-in-southeast-asia/
[7] https://www.theguardian.com/business/2021/mar/05/beware-of-frothy-spacs-london-stock-exchange-boss-tells-investors
[8] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YHa9Pf09bd0RoSzlkw34pAAAAJI&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[9] https://whitepapers.theregister.com/
The [1]company cited its strong financial performance despite COVID-19 as the reason to become a public company.
[2]
Grab said in 2020 that it accounted for 72 per cent of total regional ride-hailing gross merchandise value (GMV), 50 per cent of total regional online food delivery, and 23 per cent of total regional digital wallet payments. The company's GMV in 2020 was $12.5bn, more than double that number from two years ago.
Originally a single-country taxi-hailing app started in 2012, the superapp now operates in eight Southeast Asian nations and has added food and grocery delivery, payments, e-wallets, hotel booking, insurance, and even lending services to its app.
[3]
Grab made itself more than useful during COVID-19 lockdowns when consumers needed deliveries and online services, and the unemployed became more open to taking jobs in the gig economy.
Despite the COVID-era success, the company did [4]lay off 5 per cent of its workforce in June 2020. At the time, CEO Anthony Tan said the layoffs were unavoidable, despite cutting costs and focusing more resources on delivery services.
Uber’s Asian outpost wins Singaporean banking licence [5]READ MORE
Grab is so dominant in its home markets that Uber [6]sold its Southeast Asia operations to Grab in 2018 rather than compete. Uber retained a 27.5 per cent stake in that unit.
The SPAC involved in Grab's stock-market debut, Altimeter Growth, will alongside Grab become wholly owned subsidiaries of a new holding company with a pro-forma equity value of approximately $39.6bn.
Grab said:
At closing, the combined company is expected to receive approximately US$4.5 billion in cash proceeds, including more than US$4bn from a fully committed PIPE offering that was upsized due to significant investor interest.
SPACs are controversial because they have no commercial operations and exist solely to raise capital through an IPO, then use the cash for acquisitions that get all the benefits of public ownership without having to go through the investor and regulatory scrutiny required to float.
Some experts therefore regard SPACs as with a dose of [7]suspicion .
Investors in the Altimeter Growth/Grab mashup may not care: they'll be getting exposure to Southeast Asia's emerging markets and youthful, fast-growing population.
[8]
Once the new entity lists on NASDAQ in coming months it will trade with the symbol GRAB. ®
Get our [9]Tech Resources
[1] https://www.grab.com/sg/press/others/grab-go-public-in-partnership-with-altimeter/
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YHa9Pf09bd0RoSzlkw34pAAAAJI&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YHa9Pf09bd0RoSzlkw34pAAAAJI&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[4] https://www.theregister.com/2020/06/16/grab_job_cuts/
[5] https://www.theregister.com/2020/12/07/ubers_asian_outpost_wins_singaporean/
[6] https://www.grab.com/sg/press/business/grab-merges-with-uber-in-southeast-asia/
[7] https://www.theguardian.com/business/2021/mar/05/beware-of-frothy-spacs-london-stock-exchange-boss-tells-investors
[8] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YHa9Pf09bd0RoSzlkw34pAAAAJI&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[9] https://whitepapers.theregister.com/
SPACs.....exist solely to raise capital through an IPO...
That's a little simplistic, the clue's in the name "Single Purpose Aquisition Company". The problem they exist to circumvent is that the rules around an IPO are quite stringent when it comes to the viability of the company being floated. Thus what you do is float a company that does nothing, the SPAC. This has books that say it has ${cash}, no liabilities and no expenses and thus easily meets the financial criteria. The SPAC then takes over the real company and as there are no pesky viability rules for takeovers, this goes through.
Presto, a dodgy, high risk business successfully floated without its murky books and iffy practices being pried into by inspectors.
The interesting thing here is that taking this approach is almost invariably more expensive than an IPO, as everyone involved takes a cut, but companies still do it. The fact that they're happy to shell out, purely to avoid proving they meet the financial criteria of the stock market, gives you a really good clue as to how sound their business actually is.