How Grab pulled off a masterstroke in the world’s biggest SPAC merger valued at $40 Billion?

The ride-hailing industry has attracted a lot of attention in recent times. Apart from revolutionizing the on-demand transportation market, it has provided millions of jobs to skilled drivers and also received investments from the leading venture capitalists across the world.

Grab is a Singapore-based tech company and is also known as a popular Super App. It provides a range of services like courier, food delivery, grocery delivery, hotel booking, insurance, investment, lending, online payment processing, packing and moving, and taxi booking. 

Grab emerged in the market in June 2012 and competes with other leading players like  Didi Chuxing, Lyft, and Uber in the fast-growing ride-hailing industry. It functions in 8 nations across 400 cities and is known as South Asia’s most valuable startup. 

So let us analyze why Grab made headlines recently?

• It announced a whopping $40 billion merger with a Special Purpose Acquisition Company (SPAC) named Altimeter Growth Corporation located in the USA. The deal, which will be completed in July 2021, is the world’s largest merger.
• Some big shot investors like BlackRock, Fidelity International, Janus Henderson Group, Mubadala Investment Company, and Temasek Holdings Limited will also support the successful execution of the profitable deal by contributing more than $4 billion. 
• This will lead to a greater market share in various industries for Grab and also boost its overall growth. 
• Upgrades will be done for the ride-hailing business to enhance the quality of the last-mile delivery network. 
• Grab will get richer with cash reserves of $4.5 billion from the SPAC merger with Altimeter. 
• The SPAC merger is backed by some top names in mutual funds and sovereign wealth funds. 

What is SPAC, and let us learn more about the viewpoints of experts on it?

SPAC stands for Special Purpose Acquisition Company and is a viable alternative to a traditional Initial Public Offering (IPO). Private companies that have high growth utilize SPAC to go public by merging with an existing business. It offers advantages like less volatility, higher returns for investors and shareholders, and speedier processes in getting approval from regulatory authorities.

SPAC deals also assist retail investors in putting their money in assets of newly formed public companies. $100 billion has been raised by companies through SPACs from January to April 2021 and a total of 84 firms are planning for the same this year.

The Covid-19 pandemic was a catalyst in the tremendous rise of SPAC mergers due to low interest rates and governments announcing fiscal stimulus packages to boost their respective economies. Small companies easily entered the capital market by spending very little money on post-merger and underwriting. 

Warren Buffet, the eighth richest man in the world, said that making bargains would be difficult for his company, Berkshire Hathaway since there are so many SPAC’s being rapidly launched by speculative investors in the market now. 

Bill Gates, the fourth richest man in the globe, said that investors must avoid putting money in low-quality SPACs. He added that some companies were going public too early. 

What are the new records that Grab can break in the market with the SPAC deal?

Grab will become the first Southeast Asian unicorn (a privately-held startup worth more than $1 billion) to come out with the biggest equity offering on Nasdaq in the USA. It is all set to become one of the largest Internet companies in the world. 

Grab is predicting its net revenue to increase by 18% and also cross $500 million in earnings before tax before the start of 2023. Gross merchandise value (GMV) is predicted to rise from $12.5 billion now to $34 billion in three years. Grab made $1.6 billion in revenue in 2020 and plans to increase its total earnings to $4.5 billion by 2023. 

How Grab became a taxi-booking giant since its launch nine years ago?

It first began its business operations in Kuala Lumpur, Malaysia in June 2012 with the name “MyTeksi” after getting a $25,000 grant from the Harvard Business School, Boston. After a few years, Grab set up its headquarters in Singapore in 2017. 

Massive growth has been witnessed in the last few years for Grab after it made rapid strides in different countries like Cambodia, Indonesia, Myanmar, the Philippines, and Vietnam. It received $10 billion in funding across 8 rounds from the leading venture capitalists like GGV Capital, SoftBank, and Tiger Global Management.

Grab’s acquisition of Uber’s Southeast Asian operations in March 2018 strongly helped it to capture 72% of the market share in the ride-hailing industry in the region.

Who are the three business visionaries behind the Grab SPAC Merger?

Anthony Tan, the CEO of Grab Holdings Inc will increase his wealth to $829 million. He will get a 2.2% stake along with additional voting rights in the company. The CEO could become a billionaire quickly as the company’s shares are trading at an average of $3 above the SPAC deal price. 

Tan Hooi Ling, the Co-Founder of Grab will own $256 million of shares post the SPAC merger. Ming Maa, the President of Grab will own $144 million in shares.

Data Analytics and Grab: A deep insight on how it increases the efficiency in taxi-booking?

• With its ride-hailing services being utilized by millions of users, Grab collects a mind-boggling 40 terabytes daily by utilizing the Tableau data visualization software. 
• All this data is converted and organized into easily understandable maps covering more than 10000 km of less-traffic areas and zones. It is used for real-time tracking of locations, calculating metrics for both drivers and passengers, and also predicting travel patterns. 
• Interestingly, this 10000 km of data shared with the drivers of Grab taxis are not available even on Apple Maps and Google Maps.
• Cab drivers can locate the homes of passengers easily as Grab provides real-time information about the first and last 100 metres of the trips for better navigation.
• Data helped to add more personalized features based on the likes and preferences of the travellers in GrabShare, which is the on-demand ride-sharing app of Grab. 
• This has resulted in more convenience for customers leading to increased taxi bookings and greater income for drivers.    
• It results in better user experience, smart decision-making by drivers, and also helps in launching new products in the market. 

Final Thoughts

The market value of Grab will increase from $16 billion to $39.6 billion after the execution of the SPAC deal in July 2021. This reflects a major shift in how both customers and investors are optimistic about the future of mobility and on-demand transportation.

Grab has begun the promising revolution of Southeast Asian startups making it big in the world market through its equity offering via the SPAC merger with Altimeter in the USA. Launch an on-demand super app like Grab using the ready-made Super app solutions.

As the on-demand economy makes new inroads into several industries boosted by the increase in the consumers’ spending power, Grab will eventually become the global ride-hailing giant. 

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Marketing is my soul mate and writing is my side kick. Using my writing skills to share the knowledge of app development and upcoming technologies.