Everything you need to know about the Grab IPO

Josh Warner
Escrito por : ,  Analista de mercados

When is Grab going public?

Grab Holdings outlined its intention to go public in April when it unveiled plans to merge with a Special Purpose Acquisition Vehicle (SPAC) named Altimeter Growth. The deal should be completed in the ‘coming months’ with hopes Grab shares will be trading on the Nasdaq by the end of July under the ticker ‘GRAB’.

A SPAC is essentially a shell company that raises money from investors by listing on a stock exchange and then using those funds to acquire an existing business in private hands. This is an increasingly popular method of going public in the US as it is quicker, simpler and cheaper than the traditional IPO process.

Notably, Grab has already said it intends to conduct a secondary listing in Singapore to ensure customers, staff and partners from Southeast Asia, where it operates, can access its shares.

Grab shares: how much is Grab worth?

The deal with Altimeter will give Grab a valuation of $39.6 billion and provide $4.5 billion worth of proceeds that Grab will use to grow the business. This makes it the largest SPAC deal on record and the largest-ever US equity offering by a Southeast Asian company.

How to trade Grab shares

You will be able to trade Grab shares with Forex.com once the deal is completed and the stock goes live.

Follow these easy steps to start trading Grab shares when they go live:

  1. Open a Forex.com account, or log-in if you’re already a customer.
  2. Search for ‘Grab’ in our award-winning platform
  3. Choose your position and size, and your stop and limit levels
  4. Place the trade 

What is Grab?

Grab was founded in 2012 as a ride-hailing and taxi service. Its founders Anthony Tan and Hooi-Ling Tan were established the business as part of their determination to make taxi journeys safer across Southeast Asia while also providing the digital platform needed for drivers to maximise their income.

It started by empowering drivers by dishing out smartphones, helping them set up bank accounts and providing access to its app that helped them improve their business. It grabbed worldwide attention in 2018 when it bought Uber’s business in the region and saw its US peer take a stake in the company. Uber will sit alongside Softbank, Toyota and Didi as the largest institutional investors in Grab after the listing is completed.

It has gradually expanded into other areas over the years, most notably into delivering everything from food, groceries and goods bought online to its expanding suite of financial services that provides bank accounts, loans, mobile payments and an array of other products.

All of its services are provided through one ‘superapp’ which is localised for each country it operates in. Grab is currently live across 400 cities in eight countries – Malaysia, Singapore, Philippines, Thailand, Indonesia, Vietnam, Cambodia and Myanmar. It currently serves around 25 million people a month. Notably, income is geographically diverse with no single country accounting for more than 35% of adjusted net revenue.

In turn, it has around 5 million registered drivers serving its ride-hailing and delivery operations and 2 million merchants and businesses that use the app to sell their goods or for financial help. It has an additional 2 million GrabKios agents in Indonesia that allows small independent businesses to offer everything from a full delivery service to money transfer, mobile top-ups and the ability to pay bills to their customers.

How does Grab make money?

Grab’s diversified offering means it has several sources of income, from skimming income from each ride or delivery that is ordered to the commission it charges merchants to use its platform and selling its array of financial services.

Notably, Grab has proven its ability to move into new areas and grow them quickly. It only moved into deliveries three years ago and the division has become the biggest contributor to topline growth during the pandemic as demand for travel weighed on its ride-hailing business. It has done the same with financial services, which is now contributing significant revenue after starting to take-off in 2018.

Is Grab profitable?

Grab is not profitable and falls into the category of a fast-growing but loss-making business. However, it has outlined a path to profitability that aims to be turning positive Ebitda in 2023.

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Notably, Grab’s ride-hailing business has been profitable since the fourth quarter of 2019 and is currently converting around 11% of gross merchandise value into Ebitda. It has been its expansion into deliveries and financial services that has prevented it booking an overall profit in recent years.

Grab is aiming for deliveries to become profitable at the Ebitda level in the second half of 2021. It will take longer for financial services but the company is aiming to deliver a 30% Ebitda margin on adjusted net revenue over the long-term. Notably, financial services will offer a much higher margin than its other divisions once it is established.

Does Grab pay a dividend?

It is highly unlikely that Grab will pay a dividend to shareholders in the foreseeable future considering the amount of room it has to grow and the intense spending that will be needed to cement itself as a leading player in the Southeast Asian economy.

What is Grab’s strategy?

We have seen how the likes of ride-hailing and deliveries have exploded in popularity in the likes of North America, Europe and China over recent years and Grab is essentially riding the same wave but across Southeast Asia, where both trends are only just starting to take-off.

For example, only 11% of food is ordered online in Southeast Asia compared to 21% in the US and China, whilst just 3% of people use ride-hailing as their choice of transport compared to 5% in the US and 15% in China.

As for its move into financial services, Grab is aiming to be the company that brings people into the mainstream financial system. A shocking six out of ten people in Southeast Asia either don’t have a bank account or lack access to a suitable amount of services, and the vast majority of transactions are still cash-based. Grab wants to be the one to provide mainstream services to the 670 million people living across the region through one app on their smartphone and help accelerate the transition to card and mobile payments. Notably, almost half the population is under the age of 30, with younger people far more likely to embrace the huge digital shift that Grab is promoting.

Grab sees an enormous opportunity. It believes its total addressable market across all its businesses could grow from $52 billion in 2020 to over $180 billion by 2025.

An all-in-one app with an ever-growing list of abilities is designed to provide a flywheel effect, with each new service complimenting the others. Ideally, Grab wants people to use its app all day everyday, from ordering breakfast and ordering a ride to work in the morning to paying bills and shopping online in the afternoon. The more services Grab offers, the more consumers engage with the app and the lower it costs to provide those services. Grab says the number of users that utilise two or more services through its app has grown five-fold over the last two years alone.

In turn, increased engagement and spending by consumers through the Grab app entices more merchants and partners that want to tap into that growing user base. This then further expands the amount of products and services available on the app, attracting more consumers, with the cycle constantly repeating itself.

Who are Grab’s competitors?

Grab has managed to secure a dominant position in the ride-hailing and delivery market across the region, especially since Uber withdrew and decided to back Grab instead, underpinning confidence that Grab is the company to back in Southeast Asia. But, as it is listing in the US, it will face additional competition for investors against a slew of American peers like Uber and DoorDash. Grab’s job in this respect will be to convince US investors that the opportunity in Southeast Asia is far greater than what is being pursued by its American rivals.

There is more competition in financial services, although the market is highly fragmented. It is looking to disrupt a wide range of incumbents in different pockets of the market, like AXA and Allianz in insurance, Western Union and MoneyGram in remittance, Visa and Mastercard in payments, BlackRock and Fidelity in investments, and HSBC and Citigroup in lending. Plus, it will have a big job in convincing the region to deal more digitally when the vast majority of people are still very comfortable using cash.

Grab board of directors: who is leading Grab?

Grab is still led by its co-founders, with Anthony Tan holding the position of chief executive. He is supported by a large board of directors:

  • Co-founder and CEO – Anthony Tan
  • Co-founder – Hooi-Ling Tan
  • President – Ming Maa
  • Chief financial officer – Peter Oey
  • Chief people officer – Chin Yin Ong
  • Managing director of Grab Indonesia – Neneng Goenadi
  • Managing director of operations and head of mobility – Russell Cohen
  • Head of merchants and GrabExpress – Adelene Foo
  • Head of product – Mike Truong
  • Head of deliveries – Demi Yu
  • Head of financial services – Reuben Lai
  • Chief technology officer of financial services – Vikas Agrawal
  • Chief technology officer of deliveries – Suthen Thomas.

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