“Grab Holdings Inc. is in talks to go public through a merger with a SPAC that could value the Southeast Asian ride-hailing startup at as much as $40 billion,” WSJ writes.
Why It Matters: Well, in the middle of the SPAC frenzy, this deal would grab the crown as the biggest ever.
- To date, the biggest SPAC merger was United Wholesale Mortgage’s approximately $16 billion union with Gores Holding IV Inc. In 2021, the title belongs to Lucid Motor’s merger with Churchill Capital Corp. IV, which was valued at close to $12 billion.
- Grab, based in Singapore, is talking with a SPAC affiliated with Altimeter Capital Management that would value it somewhere between $35 billion and $40 billion. (Note: Altimeter has two SPACs so it’s unclear which one is being deployed here.)
- “As part of the deal, Grab would raise between $3 billion and $4 billion in a so-called PIPE, a funding round that typically accompanies a SPAC merger.”
This Year’s SPAC Stats (via SPACInsider):
- IPOs: 252
- Gross Proceeds: $80.7 Billion
- Average IPO Size: $320.3 Million
More On Grab: “In addition to ride-hailing, Grab, which traces its roots back to 2011, delivers restaurant, grocery and other items and provides digital financial services to merchants. Its backers include SoftBank Group Corp., Uber Technologies Inc. and Toyota Motor Corp. It was last publicly valued at around $15 billion in an October 2019 fundraising round, according to PitchBook.”
- It already looks like another win for SoftBank, which is anticipating a significant windfall from Coupang’s IPO.
Looking Ahead: The companies could announce the deal in a few weeks. But the deal is still very much in flux and could fall apart. If that were the case, Grab may pursue an earlier option of a traditional IPO on a U.S. exchange in 2021.
I think Grab is really interesting and I definitely like the Southeast Asia market.
I found a Forbes article in January 2019 saying that Grab was targeting $2 billion in 2019. We also know that Grab grew revenues by 70% in 2020 despite the pandemic. For now, let’s assume they are a $4 billion dollar company growing at 50%+ per year.
It also seems like they are great at execution, with recent success with adjacent food delivery and financial services products.
- $UBER is valued at $112 billion on $16 billion in revenue and 40%+ growth.
- $LYFT is valued at $19 billion on $3 billion in revenue and 30%+ growth.
A $40 billion valuation seems about fair in comparison to U.S. peers, and might be more attractive than $LYFT. They have revenue diversification and multiple upside segments in addition to the reopening benefit to ride-hailing. In addition, its exposure to the attractive Southeast Asian market. I’ll be keeping an eye on this one…