Grab is the most popular ride-hailing company in Southeast Asia. It’s set to go public in the US through the largest special purpose acquisition company (SPAC) merger IPO ever.
Here is what we know so far about this potentially historic event.
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What is Grab?
Grab was founded in 2012 and is based in Singapore. While it started out as a Uber-like ride-hailing app, Grab has since expanded into other areas, such as food and grocery delivery, courier services and digital payments.
The company operates in a host of Southeast Asian nations including Indonesia, Malaysia, the Philippines, Vietnam, Thailand, Cambodia and Myanmar.
Grab purchased Uber’s Southeast Asian operations in 2018, and has since grown to become the region’s leading ride-hailing app. It has yet to become profitable, but given that revenue increased by 70% in 2020, this could change soon.
What’s known about the Grab IPO?
Grab will go public through a SPAC merger and bypass the traditional IPO process.
A SPAC is a company without a business of its own that is set up to raise capital to acquire or merge with a private company, and then take it public.
In Grab’s case, the company will merge with an American SPAC known as Altimeter Growth Corp.
The merger is expected to provide Grab with about $4.5 billion (£3.3 billion) in cash proceeds. The deal will bring the value of the combined entity to nearly $40 billion (£29 billion). This makes it the biggest SPAC merger ever.
Once the deal is complete, the two entities will become fully-owned subsidiaries of a new holding company. This new company will then start trading on the US Nasdaq exchange, under the ticker symbol ‘GRAB’.
There’s not yet an official date for when the merger will happen.
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Why is Grab going public through a SPAC merger IPO?
A SPAC offers a faster path to going public. While an IPO can take years to plan and execute, a SPAC merger only takes a few months.
However, when speaking with Fortune, Grab’s president, Ming Maa, stated that timing was not an issue for the company and that it did not impact its decision to list via a SPAC.
Maa stated that the decision to merge with Altimeter was driven by a desire to find committed, long-term and experienced investment partners who share Grab’s values and strategic vision.
Regardless, a merger with Altimeter will hasten Grab’s stock market debut. It will allow the company to begin focusing on growth and increasing shareholder value right away.
SPACs have grown in popularity in recent years. According to the Wall Street Journal, they have raised more than $100 billion (£73 billion) this year alone.
Draftkings and Sir Richard Branson’s Virgin Galactic are two high-profile companies that have been funded by SPACs in recent times.
Can I buy shares in Grab’s IPO from the UK?
Yes, you’ll be able to buy Grab’s shares once the merger is complete and the new entity’s shares start trading publicly. All you’ll need is a share dealing account from a brokerage that lets you invest in overseas shares.
There are plenty of such brokerages here in the UK. To help you narrow down your choices, we’ve prepared this useful list of share dealing accounts.
But if you want to keep your gains from the taxman, you might want to consider investing in Grab’s shares via a stocks and shares ISA. This is a tax wrapper that protects any profits or income generated by your investment from taxation.
Keep in mind, however, that tax rules can change and their effect on you will depend on your individual circumstances.
As always, do your homework and consider how the investment would fit into your personal long-term investment strategy before parting with your money.
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