Grab goes public in $ 40 billion PSPC deal, largest on record

No slowdown in sight for IPOs or PSPCs

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The Singapore-based startup said on Tuesday it would merge with a special purpose acquisition company, or SPAC, backed by Altimeter Capital in a deal that would pave the way for a New York listing and value Grab at approximately $ 39.6 billion.

That’s more than double the roughly $ 16 billion the company was last privately valued at and would mark the biggest deal ever with a PSPC, or blank check company, according to Dealogic. The previous SPAC record was held by United Wholesale Mortgage, a US mortgage provider, which earned a valuation of $ 18.3 billion last fall, according to the data provider.

Under the deal, Grab is raising more than $ 4 billion in cash from investors including Fidelity, BlackRock, T. Rowe Price, Abu Dhabi Sovereign Fund Mubadala and the investment arm of the Government of Singapore Temasek. US investment firm Altimeter Capital is investing $ 750 million.

Grab plans to start trading on NASDAQ under the symbol “GRAB” in the coming months.

SPAC Frenzy Sign

PSPCs are shell companies with limited or no operating assets. They are usually made public only to raise money from investors which is then used to buy existing businesses.

These companies were laughed at on Wall Street, but they have taken off globally over the past year. More than 310 have already been launched in 2021, already beating last year’s total of 257, according to data from Refinitiv. They raised nearly $ 93 billion in the first quarter of this year alone.

Grab is the latest big name to merge with a PSPC to go public. Recently, a slew of large companies have chosen to follow the same path to market, including Playboy, DraftKings, and electric vehicle startups Nikola and Arrival.

According to Refinitiv, 110 SPAC suits worth $ 232 billion were announced in the first three months of the year.

Billionaires and celebrities alike are looking for a piece of the action by creating their own PSPCs. Richard Branson and Peter Thiel, along with athletes such as Alex Rodriguez and Colin Kaepernick, pop star Ciara, investor Bill Ackman and former White House economic adviser Larry Kudlow, all have come to an agreement.

But the boom is gaining more and more attention from regulators like the Securities and Exchange Commission. The agency warned that ordinary investors shouldn’t throw their money behind PSPCs just because there is a celebrity attached, and said Monday it would step up the review of PSPC’s accounting practices.

Take the path to the future

Grab said on Tuesday his reverse merger was unlike other such deals.

He pointed out, for example, that shares acquired by Altimeter would be subject to a three-year lock-in period, which it said is significantly longer than similar transactions and underlined confidence in the long-term potential of the startup.

Asked why the company chose to go public in the United States, rather than Southeast Asia, Grab co-founder Tan Hooi Ling said the company wanted to tap into its base of wider investors.

“For us, the US listing is important because it gives us access to the world’s largest liquidity base,” she told CNN Business on Tuesday.

“At the same time, we are still exploring alternatives to see if we can also do a simultaneous list locally, and these are still existing conversations that we are exploring. “

Grab was founded by Tan and another Malaysian entrepreneur Anthony Tan in 2012, and quickly soared to become Southeast Asia’s most valuable private company. It acquired Uber’s business in Southeast Asia in 2018 and has since expanded into a variety of other services, including food delivery, digital payments, and even financial services.

In recent years, the company has decided to market itself as a provider of a “super-app”, allowing users to do everything from booking trips to purchasing insurance and a loan. Its activity has grown to more than 25 million monthly active users in nearly 430 cities in eight countries.

The company is like a mashup of “Uber plus DoorDash plus Ant Financial, all in one app,” according to Altimeter Capital CEO Brad Gerstner.

Prior to the SPAC deal, Grab had already raised more than $ 10 billion from a list of heavy investors, including the Japanese conglomerate SoftBank (SFTBF) and the Chinese company Didi Chuxing, which plans to confidentially file its own IPO in New York in the coming weeks, according to a person familiar with the matter.

Grab has also been a winner in the coronavirus crisis. Last year, the gross value of its merchandise, a measure of sales, hit $ 12.5 billion, more than pre-pandemic levels and more than double that of 2018, according to the company.

– Julia Horowitz contributed reporting.

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