(ATF) Singapore’s Grab Holdings confirmed on Tuesday April 13 that it intends to go public in the US in the biggest special purpose acquisition company (SPAC) deal yet, in a merger with Altimeter Growth at an almost $40 billion value that is also expected to be the largest-ever US equity offering by a Southeast Asian company.
The proposed deal values Grab at an initial pro-forma equity value of approximately $39.6 billion at a private investment in public equity (PIPE) size of more than $4 billion and will provide Grab with approximately $4.5 billion in cash proceeds.
Anthony Tan, CEO and co-founder of Grab said: “It gives us immense pride to represent Southeast Asia in the global public markets. This is a milestone in our 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.”
Brad Gerstner, founder and CEO of Altimeter said: “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.”
Southeast Asia is one of the fastest growing digital economies in the world, with a population approximately twice the size of the United States, the firms pointed out, but online penetration for food delivery, on-demand mobility and electronic transactions are a fraction of the US and China.
Food delivery market tipped to explode
Across online food delivery, ride-hailing and digital wallet payments, Grab said it expects its total addressable market to grow from approximately $52 billion in 2020 to more than $180 billion by 2025.
The company said it has made significant strides towards profitability, with a key focus on building a resilient business and delivering sustainable growth.
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 approximately $39.6 billion.
At closing, the combined company is expected to receive approximately $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 has 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, 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, as well as Fidelity International, Fidelity Management and Research, 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 three-year lock-up period. Altimeter is also donating 10% of its sponsor promote shares to support the GrabForGood fund, which aims to introduce programmes 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 CEO and co-founder Anthony Tan, together with co-founder Hooi Ling Tan and president Ming Maa.
The $40 billion deal for Grab indicates that the impact of the SPAC boom on M&A will continue, even if regulatory action by the SEC in the US serves to slow down the pace of new SPAC vehicle launches.
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