The Singaporean startup started trading on the Nasdaq in New York on Thursday and closed down nearly 21%.
Grab went public through a merger with a special purpose acquisition company (SPAC). According to data provider Dealogic, this transaction-Grab raised $4.5 billion and is valued at nearly $40 billion-is the largest transaction on record. This is also the first appearance of the Southeast Asian company’s largest US market. According to data from Refinitiv, the previous record was maintained by an Indonesian satellite company that raised nearly US$1.2 billion in 1994.
But they quickly reversed course and closed at $8.75 per share.
SPAC is a shell company with limited or no operating assets. They usually go public just to raise funds from investors, which are then used to buy existing businesses.
However, regulators have stepped up their review of this process. For example, the US Securities and Exchange Commission tightened its accounting guidance for SPACs, and members of Congress held hearings on the matter.
This concern has led to a sharp drop in SPAC activity and there may be more supervision: a bill to strengthen the rules surrounding SPAC is currently passing Congress. One proposal will force blank check companies to disclose to retail investors the risks of supporting shell companies, while another proposal may increase their responsibility for making false or misleading forward-looking statements.
A “super app”
Through its transaction, Grab Raised funds from investors including 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 rang The bell for the opening ceremony of the exchange in Singapore on Thursday night, including Grab drivers and merchants.
In recent years, the company has shaped itself as a “super app” that allows users to do everything from booking rides to buying insurance and loans. More than 25 million people use the app to conduct transactions every month, spread across 465 cities in eight countries.
In an interview on Thursday, Chief Financial Officer Peter Oey stated that the company will use the proceeds from the listing to double its existing script.
“We are just getting started in Southeast Asia,” he told CNN Business.
Oey believes that there is still a “huge opportunity” to develop the company’s core business in the country. He said that grocery delivery services in the region are still in their infancy. He added that at the same time, online car-hailing services in the region are far less mature than in China.
Oi did not rule out the possibility of more mergers and acquisitions, and pointed out that “strategic opportunities will emerge.”
Grab has previously stated that it chose to list in the United States rather than Southeast Asia because it wants to take advantage of a larger investor base.
But Oey said on Thursday that the company does not rule out the possibility of listing on another exchange at some point. “We are open to Southeast Asia and other opportunities,” he added.
However, the executive emphasized that the company will take action step by step.
“Now for us [about] Make sure we execute our business and stay focused, and support the shareholders who walk with us,” Oey said.
– Jill Disis and Julia Horowitz contributed to this report.
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