Grab IPO Plunges 21% in Largest US First Launch of Southeast Asian Company

The Singaporean startup closed nearly 21% on Thursday as it began trading on New York’s Nasdaq.

Grab went public by merging with a Special Purpose Acquisition Company, or SPAC. The deal – in which Grab raised $ 4.5 billion and was valued at nearly $ 40 billion – was the largest of its kind on record, according to data provider Dealogic. It is also the largest launch in the US market for a Southeast Asian company. The previous record was held by an Indonesian satellite company, which raised nearly $ 1.2 billion in 1994, according to data from Refinitiv.

As part of the deal, Grab merged with Altimeter Growth Corp (AGC), a SPAC launched by Altimeter Capital, a US investment firm. The company’s shares, now traded under the ticker symbol “GRAB”, opened nearly 20% above the Altimeter’s closing price the day before on Thursday.

But they quickly changed direction, closing at $ 8.75 a share.

Grab has taken a relatively unconventional route to marketing, although it has grown in popularity over the past year or so. The combination with PSPCs was once looked down on on Wall Street, but recently a slew of big companies have chosen to go down the same path, including Playboy, DraftKings, and electric vehicle startups Lucid Motors and Arrival.

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

Regulators, however, have stepped up oversight of the process. The Securities and Exchange Commission, for example, tightened its accounting guidelines for SPACs, while congressional lawmakers held a hearing on the matter.

This attention has driven PSPC activity down, and more regulations may be on the way: Bills to tighten the rules for PSPCs are currently under consideration in Congress. One proposal would require blank check companies to disclose to retail investors the risks of backing shell companies, while another bill could increase their liability for false or misleading forward-looking statements.

A “great app”

Thanks to his agreement, Grab has raised funds from investors such as Fidelity, BlackRock, T. Rowe Price, Abu Dhabi sovereign wealth fund Mubadala and Singapore government investment arm Temasek.

Co-founders Anthony Tan and Hooi Ling Tan called the the opening bell of the Singapore stock exchange on Thursday evening during a ceremony including Take the drivers and the traders.

Malaysian entrepreneurs, who share a last name but are unrelated, founded Grab in 2012. It quickly became Southeast Asia’s most valued private company.
Grab acquired Uber’s Southeast Asia business 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 touted itself as a “super app”, allowing users to do everything from booking rides to purchasing insurance and loans. More than 25 million people use the app every month to complete a transaction, in 465 cities in eight countries.

In an interview Thursday, CFO Peter Oey said the company would use the proceeds from the listing to double its existing playbook.

“We’re just getting started in Southeast Asia,” he told CNN Business.

Oey argues that there is still a “huge opportunity” to expand the company’s core business in his country. Grocery delivery services in the region are still in their infancy, he said. Meanwhile, carpooling in the region is much less established than in China, he added.

Oey also did not rule out the possibility of making more mergers and acquisitions, noting that “strategic opportunities will arise.”

Indonesia just completed its biggest IPO ever

Grab has previously said he chose to go public in the United States rather than Southeast Asia because he wanted to tap into a larger investor base.

But Oey said Thursday the company would not rule out the possibility of listing on another exchange at some point. “We are open to Southeast Asia and other opportunities,” he added.

Still, the executive stressed that the business would go step by step.

“For us at the moment it’s [about] making sure we run the business and stay focused, and support the shareholders who are behind us, ”said Oey.

– Jill Disis and Julia Horowitz contributed to this report.

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