The Singapore-based startup announced Tuesday that it would merge with a special-purpose acquisition company, or SPAC, backed by Altimeter Capital in a deal that would pave the way for a New York listing and value Grab at about $39.6 billion.
Under the deal, Grab is raising more than $4 billion in cash from investors including Fidelity, BlackRock, T. Rowe Price, Abu Dhabi sovereign wealth fund Mubadala, and Singapore government investment arm Temasek. US investment firm Altimeter Capital is putting up $750 million.
Grab plans to start trading on the NASDAQ under ticker symbol “GRAB” in the coming months.
Sign of SPAC frenzy
SPACs are shell companies with limited or no operating assets. They usually go public solely to raise money from investors that is then used to buy existing businesses.
These firms used to be sneered at on Wall Street, but have taken off globally in a big way over the past year. More than 310 have already been launched in 2021, already beating last’s year total of 257, according to data from Refinitiv. They raised almost $93 billion during the first quarter of this year alone.
According to Refinitiv, 110 SPAC combinations worth $232 billion were announced during the first three months of the year.
Grab’s path forward
Grab said Tuesday that its reverse merger is unlike other such deals.
It pointed out, for example, that the shares acquired by Altimeter will be subject to a three-year lockup period, which it said is significantly longer than similar transactions and highlighted confidence in the startup’s long-term potential.
Asked why the firm chose to go public in the United States, rather than in Southeast Asia, Grab co-founder Tan Hooi Ling said that the company wanted to tap into its larger investor base.
“For us, the US listing is important because it gives us access to the widest global base of liquidity,” she told CNN Business in an interview Tuesday.
“At the same time, we’re still exploring alternatives on whether we can do a concurrent listing locally as well, and those are still existing conversations that we’re exploring.”
The company is comparable to a mashup of “Uber plus DoorDash plus Ant Financial, all in a single app,” according to Altimeter Capital CEO Brad Gerstner.
Grab has also been a winner of the coronavirus crisis. Last year, its gross merchandise value, a measure of sales, reached $12.5 billion, higher than pre-pandemic levels and more than double that of 2018, according to the company.
— Julia Horowitz contributed reporting.