Grab valued at nearly $ 40 billion in successful PSPC deal

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  • Grab is a global “super app”, with services ranging from food delivery to financial services.
  • It is now valued at nearly $ 40 billion in what is expected to be the biggest PSPC deal in history.
  • The 9-year-old company was started as a rideshare service with just $ 10,000 from a business school competition.
  • See more stories on the Insider business page.

About 15 years ago, Grab co-founder Hooi Ling Tan was afraid to hail a taxi in her hometown of Kuala Lumpur.

Then a junior business analyst for management consulting firm McKinsey, Tan described feeling his options for coming home after working late at night were limited. The Malaysian capital was known to have one of the worst taxi systems in the world. She also did not feel safe returning home as she was afraid of falling asleep at the wheel after a long day.

As an alternative, she created a manual GPS tracking system with her mother.

“I would literally send her the license plates of the car, the name of the driver and the license plate number of the taxi I rode in,” she said in an interview with Bloomberg’s Emily Chang. TV. When she reached certain landmarks in the city, she texted her mother to know how close she was to her home.

“Every night she slept in front of our couch waiting for me,” she says.

Grab, the Singapore-based startup that Hooi Ling started with co-founder Anthony Tan, is valued at nearly $ 40 billion after announcing what is expected to be the biggest on Tuesday.

SPAC
deal in history.

The company has announced its intention to go public through a merger with Altimeter Capital. As part of the deal, Grab will raise $ 4 billion in a so-called PIPE, or private equity investment – a round of funding that is typically associated with a PSPC merger. Other investors in PIPE include BlackRock, Fidelity, T. Rowe Price Group and Morgan Stanley, among others.

As part of the deal, Grab said it will also earn $ 4.5 billion in cash, which it will use to invest in future growth of users and services. And despite the large Nasdaq listing, Grab’s co-founders insist they still don’t consider US expansion.

“We’re going to stay focused on Southeast Asia because we think we’ve really only scratched the surface of the opportunity here,” Hooi Ling told Insider.

catch the tan

Grab co-founders Anthony Tan and Hooi Ling Tan

Grab

The company that was once known as ‘Uber of Southeast Asia’ started nearly ten years ago as a ridesharing platform, but has since transformed its business into a ‘super app’ or single platform that simultaneously offers Uber DoorDash, PayPal and a host of other services at the same time.

Hooi Ling Tan and fellow Malaysian Anthony Tan (unrelated) first met at Harvard Business School. Hooi Ling grew up in what she describes as a typical middle-class family. His father was a civil engineer and his mother was a stockbroker. On the other hand, Anthony was born into one of Malaysia’s wealthiest families as the son of CEO of Tan Chong Motor, one of the country’s largest auto distributors.

The couple ended up sitting next to each other in a class called “Business at the Base of the Pyramid”. As part of a class assignment, they wrote a business plan for a mobile app that would help connect taxi drivers to taxi drivers back home in Malaysia.

This business plan was then submitted to a Harvard Business School competition, and as finalists, Anthony and Hooi Ling received a check for $ 10,000. The reason they didn’t win the top spot, according to Hooi Ling, was because the judges felt Southeast Asia was too small a market to focus on.

They took that check, along with an initial angel investment from Anthony’s mother, to officially launch what was then called MyTeksi in June 2012.

Like most stories of startup growth pains, Anthony described a slow start for the young company. To win customers over, he set up a folding table at a local gas station every morning and offered the taxi drivers of the nasi lemak a Malaysian breakfast dish. “We were like, ‘Hey uncle, give us a chance,’” said Anthony, describing how Malaysians refer to elders regardless of family ties.

GettyImages 1176816141 (1) NEW YORK, NEW YORK - SEPTEMBER 24: Dara Khosrowshahi, CEO, UBER speaks on stage during the 2019 Concordia Annual Summit - Day 2 at the Grand Hyatt New York on September 24, 2019 in New York City.  (Photo by Riccardo Savi / Getty Images for Concordia Summit)

PDG d’Uber, Dara Khosrowshahi.

Riccardo Savi / Getty Images

Six years later, the still young company managed to secure a deal to acquire Uber’s assets in Southeast Asia. Uber had tried to compete with Grab in eight fast-growing markets in Southeast Asia, including Singapore, Indonesia and Thailand. The American company had invested 700 million dollars in the region.

In the Bloomberg TV interview, Anthony Tan described a secret meeting in San Francisco with then-newly appointed Uber CEO Dara Khosrowshahi.

“We met away from the office and away from the media,” he said. “Just me and him in a private room, and we started to build trust that way. ”

During the negotiations, Khosrowshahi said, “Listen guys, does it make sense to keep having this street struggle city by city? He remembers.

In March 2018, the agreement was concluded. Uber walked away with a 27.5% stake in Grab and Khosrowshahi joined the board. “We both agreed this was the best result for both companies,” he said. Uber said it now owns around 16% stake in Grab.

In recent years, the company has grown into the leading super app platform in Southeast Asia and has expanded its range of services beyond ridesharing to include grocery delivery, mobile payments and financial services. in 428 cities in 8 countries.

“They are among the few who can navigate the diversity of several countries in Southeast Asia, learning from the needs of customers in different regions to create a SuperApp that makes accessing many different applications convenient for all.” said Jixun Foo, managing partner of GGV Capital who led Grab’s $ 15 million Series B in 2014.

Grab’s other major backers are Softbank, Toyota and Tiger Global Management. It was last publicly valued at around $ 16 billion after raising more than $ 10 billion in total equity from investors.

In addition to breaking the record for the SPAC deal, Grab is also set to become the largest U.S. offering ever made by a Southeast Asian company. As part of the transaction, Altimeter is also donating 10% of its shares to a recently announced endowment fund called GrabForGood, which will provide education and financial support to underserved communities in Southeast Asia.

“Altimeter invests in a way that demonstrates our aligned values,” Anthony Tan told Insider. “This is a testament to the belief of the global investment community in the long-term value proposition of Grab’s superapp strategy and the exciting growth potential of Southeast Asia. ”

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