Grab Holdings Inc. announced Tuesday its merger with special purpose acquisition company Altimeter Growth Corp. ahead of the plan to hold the largest initial public offering in the United States by a Southeast Asian company.
Grab said in a statement it was planning to go public in the United States in partnership with Altimeter Growth in what is expected to be the largest U.S. equity offering by a Southeast Asian company.
The combined company expects its securities to be traded on NASDAQ under the symbol “GRAB” in the coming months, Grab Holdings said in a statement.
The proposed transactions will give Grab an initial pro-forma equity value of $39.6 billion at a private investment in public equity size of more than $4.0 billion. These will provide Grab with $4.5 billion in cash proceeds.
The Grab app has more than 9 million drivers, merchants and agents. Grab offers a wide range of on-demand services including mobility, food, package and grocery delivery services, mobile payments and financial services across 428 cities in eight Southeast countries.
Grab Group co-founder and chief executive Anthony Tan described the transactions as a milestone in its journey to open up access for everyone to benefit from the digital economy.
"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. As we become a publicly-traded company, we’ll work even harder to create economic empowerment for our communities, because when Southeast Asia succeeds, Grab succeeds,” Tan said.
Brad Gerstner, founder and chief executive of Altimeter, said, that “as one of the world’s largest and fastest-growing internet companies, Grab is paving the digital path forward for the 670 million citizens of Southeast Asia".
"We are thrilled that Grab selected Altimeter Capital Markets as their partner to go public and even more excited to become sizable long term owners in this innovative, mission driven company,” Gerstner said.
Southeast Asia is one of the fastest growing digital economies in the world, with a population twice the size of the United States. Yet online penetration for food delivery, on-demand mobility and electronic transactions are a fraction of the U.S. and China.
Across online food delivery, ride-hailing and digital wallet payments, Grab expects total addressable market to grow from $52 billion in 2020 to more than $180 billion by 2025.
Grab said it is perfectly positioned to serve the needs of consumers, merchants and drivers in Southeast Asia through its superapp strategy. It offers an ecosystem of complementary services, addressing high-frequency, everyday needs, all through one app.
Grab said its decision to become a public company was driven by strong financial performance in 2020. It posted gross merchandise value of $12.5 billion in 2020, surpassing pre-pandemic levels and more than doubling from 2018.
The company is also the category leader in Southeast Asia for core verticals, accounting for 72 percent of total regional GMV for ride-hailing, 50 percent of total regional GMV for online food delivery and 23 percent of regional TPV for digital wallet payments in 2020.
it also made significant strides towards profitability, with a key focus on building a resilient business and delivering sustainable growth, achieving positive segment EBITDA in mobility across all markets and positive segment EBITDA in deliveries in five of six countries.
Grab’s journey to becoming a U.S.-listed public company will be facilitated by a definitive business combination agreement between Grab and Altimeter Growth, a special purpose acquisition company.
Pursuant to the proposed transactions, Altimeter Growth and Grab will become wholly-owned subsidiaries of a new holding company. The combined company is expected to have an equity value on a pro-forma basis of $39.6 billion.
At closing, the combined company is expected to receive $4.5 billion in cash proceeds, including more than $4.0 billion from a fully committed PIPE offering that was upsized due to significant investor interest.
Altimeter also committed up to $500 million to a contingent investment to be equal to the aggregate dollar amount of redemptions from Altimeter Growth’s shareholders.
The PIPE was led by funds managed by Altimeter Capital Management LP which committed $750 million, with participation from funds and accounts managed or advised by BlackRock, Counterpoint Global (Morgan Stanley Investment Management), and T.Rowe Price Associates, Inc. as well as Fidelity International, Fidelity Management and Research LLC, Janus Henderson Investors, Mubadala, Nuveen, Permodalan Nasional Berhad and Temasek.
Leading family groups from Indonesia including Djarum, the Sariaatmadja family and Sinar Mas also participated in the PIPE.
As part of Altimeter’s long-term commitment to Grab, Altimeter’s sponsor promote shares are subject to a 3-year lock-up period.
Altimeter is also donating 10 percent of its sponsor promote shares to support the GrabForGood fund, which aims to introduce programs with long-term social and environmental impact, including education, financial support for underserved communities and environmental issues.
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 Grab Group CEO and co-founder Anthony 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. They're joining our journey for the long-run, together with an incredible day one cap table of renowned institutional investors and sovereign wealth funds. This is testament to the global investment community’s belief in the long-term value proposition of Grab’s superapp strategy and the exciting growth potential of Southeast Asia,” said Tan.
The proposed transactions, which have been approved by the boards of directors of both Grab and Altimeter Growth, are expected to close in the coming months, subject to shareholder approvals, and other customary closing conditions.