Grab IPO plunged 21%, becoming the largest US IPO for a Southeast Asian company

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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.

According to the agreement, Grab merges In cooperation with Altimeter Growth Corp (AGC), this is a SPAC launched by the US investment company Altimeter Capital. The company’s stock is now traded under the symbol “GRAB”, and its opening price on Thursday was nearly 20% higher than Altimeter’s closing price the day before.

But they quickly reversed course and closed at $8.75 per share.

Grab has taken a relatively unconventional path to listing, although this path has gained popularity in the past year. The merger with SPAC was once sneered on Wall Street, but recently many big companies have chosen the same route, including Playboy, DraftKings, and electric car startups Lucid Motors and Arrival.

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.

Malaysian entrepreneurs with the same surname but no blood relationship founded Grab in 2012 and quickly soared to become the most valuable private company in Southeast Asia.
Grab went public in a $40 billion SPAC transaction, the largest transaction on record
Grab acquired Uber’s Southeast Asia business in 2018 and has since expanded to various other services, including food delivery, digital payments and even financial services.

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.”

Indonesia just conducted its largest IPO ever

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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