Seizing the day
South-East Asia’s largest ride-hailing and food delivery company Grab Holdings created history when it opted to list in the US through a merger with a special purpose acquisition company in the biggest blank-cheque company deal ever.
Singapore-based Grab’s decision to become a publicly listed company was triggered by the business’s strong performance in 2020, despite the Covid-19 pandemic. Grab recorded a gross merchandise value of around US$12.5bn in 2020, surpassing the pre-pandemic level and more than doubling from 2018.
At the height of last year’s SPAC euphoria, it opted for a listing through a merger instead of going for an IPO in the US or Singapore.
It went for the SPAC merger model as it found alignment with the Nasdaq-listed SPAC Altimeter Growth Corp. The SPAC’s sponsor is an associate of Altimeter Capital Management, a well-known technology specialist fund in the US. Altimeter’s experience in listing good quality companies and willingness to commit capital to the combined company gave Grab the confidence to take the SPAC merger route.
The confidence paid off as Grab’s merger with the SPAC came at a valuation of US$40bn, a 150% rise from the previous year’s valuation of slightly over US$16bn.
The transaction comprised the issuance of US$35.1bn of shares to existing shareholders of Grab, US$500m from a trust backstopped by Altimeter Growth Corp, and a US$4bn private investment in public equity – the largest PIPE transaction in history.
Altimeter Capital Management joined the PIPE as an anchor investor with an order of US$750m, sending a strong signal that encouraged marquee investors to sign up. Investors in the PIPE included asset managers like BlackRock and Fidelity International, state-backed fund managers Mubadala, Permodalan Nasional and Temasek, and Indonesian family groups such as Djarum and Sinar Mas.
The PIPE valuation translated into 9.2 times 2022 adjusted net revenue (6.7 times for 2023), capturing the top of the market.
Altimeter showed its commitment to Grab by agreeing to a three-year lock-up on the sponsor promote and committing 10% of it to the “GrabForGood” fund, which aims to support programmes that will have a positive long-term social and environmental impact.
Evercore was lead financial adviser to Grab. JP Morgan and Morgan Stanley were co-advisers. JP Morgan and Morgan Stanley were the lead placement agents on the PIPE with Evercore and UBS as co-placement agents.
Grab will use the funds raised from the business combination to expand its online food delivery, ride-hailing and digital wallet payments businesses.
The transaction was the largest US share listing by a South-East Asian company and showed other Asian technology companies that they could find a good reception overseas through SPAC mergers.
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