Singapore-based Grab Holdings announced it will go public on the NASDAQ stock exchange through a merger with special purpose acquisition company (SPAC) Altimeter Growth Corp. (NASDAQ: AGC) in a deal that will value the company at approximately $39.5 billion.
AGC was off more than 5% in morning trading following the news. It closed Monday at $13.95.
Grab will net nearly $4.5 billion in funding from the transaction, including private investment in public equity (PIPE) funding of $4 billion. Altimeter Capital Management will contribute $750 million to the PIPE. Additional PIPE investors include accounts managed or advised by BlackRock, Counterpoint Global (Morgan Stanley Investment Management), T. Rowe Price Associates, Fidelity International, Fidelity Management and Research LLC, Janus Henderson Investors, Mubadala, Nuveen, Permodalan Nasional Berhad, and Temasek.
The deal is expected to be the largest-ever U.S. equity offering by a Southeast Asian company and is the largest SPAC deal to date. The previous largest announced SPAC deal was a $24 billion deal for Lucid Motors.
News of the potential merger first came to light in early March.
The merger has been approved by the boards of both Grab and Altimeter Growth and is expected to close by July, pending shareholder approval.
“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,” said Anthony Tan, group CEO and co-founder of Grab. “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.”
Grab’s app offers a variety of services for both customers and drivers. The app offers the ability to schedule deliveries of food or e-commerce purchases, mobility including rideshare, trains or buses, purchase digital advertising, and financial services including digital wallets, insurance, investment strategies and loans.
Grab reported $12.5 billion in gross merchandise value (GMV) in 2020 and adjusted net revenue of $1.6 billion. The company said more than 1.9 billion transactions were completed on its platform in 2020 and there were more than 5 million registered driver partners as of December 2020 and 2 million merchant partners.
Grab operates in over 400 cities across eight countries.
In its investor presentation, Grab said it was the category leader in multiple sectors, including deliveries, mobility and financial services in Southeast Asia, where online food delivery is still in its infancy. The company believes its addressable market will grow from $52 billion in 2020 to $180 billion by 2025.
The presentation noted that Grab expected GMV to grow from $12.5 billion in 2020 to $34.2 billion by 2023.
Altimeter has agreed to a three-year lockup period for its sponsored shares and committed to 10% of the sponsor shares going to the recently announced GrabForGood Fund to support programs with long-term social and environmental impact. The GrabForGood fund was announced last week with an initial fund size of $275 million, including a personal contribution of $25 million in Grab shares from Tan together with co-founder Hooi Ling Tan and President Ming Maa.
“We’ve always believed in long-term partnerships to drive impact at scale. We work closely with governments to support their national agendas and have partnered with some of the world’s best blue chip companies. Altimeter is investing in a way that demonstrates our aligned values, with a three-year lock-up on their sponsor promote shares and unprecedented contribution of shares to our new GrabForGood endowment fund,” Tan said.