SoftBank-backed Grab to go public in the world’s largest SPAC merger

13 Apr, 2021 04:06
source: Singularity Financial

Singularity Financial Hong Kong April 13, 2021 –Southeast Asia’s ride-hailing giant Grab announced Tuesday it would go public on the Nasdaq Stock Market by merging with Altimeter Growth Corp., securing a near-$40 billion valuation—more than doubled in just 18 months and the largest blank-check merger to date.

Grab says it intends to list on the Nasdaq under ticker symbol GRAB following the deal’s completion. Altimeter Growth’s stock rose more than 8% in premarket trading after the announcement, from its previous close of $13.95 a share.

The merger comes alongside a $4 billion-plus private investment in public equity (PIPE) arrangement, managed by BlackRock, Fidelity, T. Rowe Price, Morgan Stanley’s Counterpoint Global fund and Singapore’s sovereign wealth fund Temasek. PIPEs are mechanisms for companies to raise capital from a select group of investors that make the final market debut possible through their financing.

Altimeter Capital – the sponsor of Altimeter Growth Corp. – which has $16 billion under management, is leading the PIPE round with a $750 million contribution. Altimeter pledged not to sell its so-called sponsor shares for three years, much longer than the typical six to 12 months lockup seen in other SPAC mergers. These shares, sometimes also called a promote, reward sponsors for putting a deal together. Altimeter will donate 10% of those shares to the company’s GrabForGood Fund.

Grab, which started in 2012 as a ride-hailing service in Southeast Asia, has turned itself into a superapp, a single platform that provides an array of digital services such as transportation, food delivery, hotel bookings, online banking, mobile payments and insurance services from its app.

It operates in most of Southeast Asia, serving more than 187 million users in over 350 cities across eight countries. Its top backers include the SoftBank Vision Fund, Uber Technologies Inc. and Chinese ride-hailing giant Didi Chuxing.

Grab has had more than 214 million app downloads across the eight Southeast Asian countries where it operates. The company recorded $12.5 billion in gross merchandise value last year, surpassing the pre-pandemic level and more than double the 2018 level.

The SPAC market has cooled off in recent weeks, with the pace of new issuance slowing substantially and many of the vehicles trading lower. The Securities and Exchange Commission also has stepped up its scrutiny of blank-check deals.

The Grab transaction shows there is still quite a bit of life in the market.

Altimeter’s CEO Mr. Brad Gerstner said in an interview that the firm has built out a new slate of offerings for entrepreneurs seeking to raise capital in the private or public markets that will help them choose their investors directly and prepare for public ownership.

In another large potential blank-check deal, Polestar, an electric-vehicle company owned by China’s Zhejiang Geely Holding Group Co. and Volvo Car Corp., is considering going public via a SPAC at a valuation of as high as $40 billion, the Journal reported Tuesday.