Buyback shares drop sharply after world’s largest Spac contract – .

Buyback shares drop sharply after world’s largest Spac contract – .

Shares of Singapore-based Grab fell sharply on their Nasdaq debut on Thursday after the Southeast Asian super app struck a record $ 40 billion merger deal with a blank check company listed in New York.

Grab, one of the region’s most valuable tech companies, offers food delivery, ridesharing, and financial services. He relied on global investors including T Rowe Price, Temasek, BlackRock, Fidelity and Mubadala for the deal.

The shares opened at $ 13.06 on Thursday, up from the close of $ 11.01 the day before, as the shares still traded as Altimeter Growth Corp, a special purpose acquisition company. , or Spac. But they ended the trading day at $ 8.75, bringing the company’s market value down to $ 34.6 billion by the close of the market.

“It’s certainly pretty symbolic of how Spacs is doing,” said Lily McGonagle, data analyst at Renaissance Capital, manager of IPO-focused exchange-traded funds. She said there would be “a lot more hesitation” after such a prestigious Spac had “done so badly.”

Spacs are legal entities that raise funds on the public market for the sole purpose of making acquisitions, hence the nickname “blank check”. Some analysts have questioned whether the Grab List will take place this year. In April, Grab announced the merger deal with Altimeter Growth just as regulatory scrutiny began to deflate a pandemic-era boom in the Spac market.

The deal was later delayed so that Grab could conduct a financial audit of its accounts for the past three years.

In addition, Grab has grappled with the spread of the Delta coronavirus variant over the summer in several of its major markets, including Indonesia and Vietnam, and downgraded its earnings forecast to several. times.

But chief executive Anthony Tan said Grab’s super app strategy – mirroring the range of services it offers on its app – has made it more resilient during the pandemic than other groups that focused solely on the carpooling or food delivery. Uber, Deliveroo, Lyft and others have seen steep declines since the summer.

“When mobility is down, food is up. Digital payments are also increasing. If Vietnam is down, Indonesia is up. That’s the beauty of being a great regional app for everyday needs, ”Tan said.

Grab, which is not yet profitable, has capitalized on investor interest in the digital transformation of Southeast Asia to secure the largest Spac deal in the world. Shareholder buybacks – investors who opted out of the Spac acquisition – were almost nil.

Tan, who will own 60.4% of the voting rights while owning just 2.2% of the newly listed company, said the Spac path has been the right one. “We need to lock in the assessment early. We need to lock in the best cap table from day one, ”he said.

Chris Conforti, partner of Altimeter Capital, said much of the foam came out of the Spac market as a result of “unscrupulous activity”.

Altimeter put $ 750 million in the so-called private equity investment in a private equity deal, known as Pipes, which was part of the deal. Conforti said that the great commitment of the Spac sponsor was one of the simple solutions that could benefit the Spac market.

“Spac sponsors should put money in the Pipe. . . you must lock the “promotion” of your sponsor. I don’t think you should just be able to get away with this. There should be a short and long term alignment, ”he said, arguing that Grab could be seen as a model.

Despite this, shares of Altimeter Growth have been volatile since the announcement of the Grab deal. Analysts said this is likely to subside.

” Once [Altimeter Growth Corp] starts trading as Grab, this will change. It will not trade based on the Spac market, but rather as a fundamental activity, ”said Nirgunan Tirruchelvam, analyst at Tellimer. “Southeast Asia is on the verge of a technology boom and Grab is at the center of this story. “

This article has been modified since its publication to clarify that Grab is not Southeast Asia’s most valuable tech company.


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