Southeast Asia’s ride-hailing giant Grab fell sharply on its first day trading on the Nasdaq, after becoming the largest-ever company to close a SPAC merger and go public.
Shares opened the trading day at $13.06 apiece under ticker symbol “GRAB,” following a deal with Altimeter Growth Corp. that valued the four-time CNBC Disruptor 50 company at nearly $40 billion. But they lost more than a fifth of their value by Thursday’s closing bell, finishing more than 20% lower at $8.75 apiece.
Grab, ranked No. 16 on last year’s CNBC Disruptor 50 list, sells an array of digital services such as transportation, food delivery, hotel bookings, online banking, mobile payments and insurance services from its app — earning the “super app” title. It operates in most of Southeast Asia, serving more than 187 million users in over 465 cities across eight countries. Still, revenue at the company was down 9% year-over-year as net losses expanded to $988 million, up from $621 million.
Grab’s early backers include SoftBank, Toyota, Hyundai Motor and China’s Didi Chuxing, among others.
“We don’t view growth and profitability as mutually exclusive. We operate in a market with a large market opportunity and low penetration across our verticals,” Grab co-founder and CEO Anthony Tan said Tuesday on CNBC’s “Squawk Box.” “We do believe we have a cost leadership advantage.”
A SPAC, which stands for special purpose acquisition company, is created to raise capital from public markets and then use that cash to merge with a private company and take it public within a two-year timeframe.
Investors in SPACs as a rule do not know the identity of the firm that will be targeted for merger. After a blockbuster year, there are currently over 400 SPACs actively looking for a target company, according to data from Wolfe Research.
The Grab deal included a record $4 billion private placement led by Altimeter Capital Management. So-called PIPE financing is a mechanism for companies to raise capital from a select group of investors that make the final market debut possible. BlackRock, T. Rowe Price Associates, Morgan Stanley Investment Management’s Counterpoint Global arm and Janus Henderson Investors are also participating.
“Anthony, [Tan Hooi] Ling, and the rest of the talented management team at Grab have built a superapp across mobility, delivery, and financial services — together which has the potential to fuel the dramatically changing and growing digital economy in Southeast Asia”, said Denny Fish, portfolio manager and technology sector lead at Janus Henderson Investors said in an email to CNBC. “Given its purpose based mission, Grab is in a unique position to benefit from this historical shift.”
The proprietary CNBC SPAC 50 Index, which tracks the 50 largest U.S.-based pre-merger blank-check deals by market cap, soared earlier this year but has since suffered a steep decline and is now negative on the year. The CNBC SPAC Post Deal Index, which is comprised of the largest SPACs that have come to market and announced a target acquisition, has seen its year-to-date gains wiped out.
Still, the SPAC market staged a comeback before the recent market turmoil triggered by the omicron variant, with issuance hitting an eight-month high as the industry continues to ride out regulatory challenges. The number of new deals in October nearly doubled that in September and was also higher than the total during the same time last year, according to SPACInsider and CNBC calculations.
Source: CNBC
Two Senior Grab Executives Quit as Company Rejigs Unit to Stem Losses
SINGAPORE - Two top executives at Grab Holdings' fintech business have quit, adding to other senior departures in recent months, as the Southeast Asian ride-hailing and delivery firm rejigs the key unit at the loss-making group, two sources said.
Chris Yeo, who heads Grab's payments and rewards business and has been with the company for nearly six years, is leaving along with Jeffrey Goh, who leads the payments gateway business, the sources familiar with the matter told Reuters.
Both Yeo and Goh worked at the Grab Financial Group's GrabFin unit, which provides digital payments, financing, insurance, rewards, and wealth management services, and is an important plank of Grab's regional growth strategy.
The latest executive departures come as Grab's losses rose to $3.6 billion in 2021 from $2.7 billion a year earlier, while revenue rose 44%, with investors focusing on how the firm plans to stem losses.
Grab narrowed its loss in the first quarter.
Since listing on Nasdaq in December after a record $40 billion merger with a blank check firm, Grab's shares have shed three-quarters of their value against a backdrop of plunging tech stocks and its continued losses.
"Many business groups within GrabFin have been put on notice with significant performance metrics," said one of the sources. "There's an intense focus on getting to profitability."
Yeo and Goh, managing directors at Grab, which counts SoftBank Group Corp's Vision Fund and Uber as its biggest shareholders, are serving their notice periods, said the sources, declining to be identified as they were not authorised to speak to the media.
The news of their exits and the rejig at GrabFin has not been made public previously.
The departures at GrabFin come a month after Grab's head of lending, former banker Ankur Mehrotra, who played a key role in the fintech unit's expansion, quit after a six-year stint.
This year, one of Grab's senior tech executives also departed to lead a cryptocurrency gaming firm, while Grab's head of insurance and wealth left to form a startup.
Grab declined to comment specifically on the executives' departures. There was no immediate response from Yeo and Goh to a Reuters query.
In an email response to Reuters, Grab said it was focused on expanding its regional fintech ecosystem and saw significant opportunity in Southeast Asia across all its businesses.
It said its fintech operations would now be led by its country teams.
GROWTH POTENTIAL
Grab last week forecast a rebound in its mainstay ride-share and food delivery businesses as Southeast Asian economies recover from a pandemic-led slump.
Anthony Tan, Grab's co-founder and CEO, told analysts that Grab was driving towards profitability through disciplined cost management.
GrabFin was streamlining its regional and country teams with a view to focus on lucrative areas, the sources said. One of the sources said the company was seeking to cut losses in the many areas GrabFin operated in.
Grab, which operates in 480 cities in eight countries in Southeast Asia, has more than five million registered drivers and two million-plus merchants on its platform. The company sees GFG as a business with huge growth potential.
Grab's regional digital banking business, which includes a digital banking joint venture in Singapore and Malaysia, is also part of GFG. Grab also acquired a minority stake in an Indonesian bank this year.
https://money.usnews.com/investing/news/articles/2022-05-25/exclusive-two-senior-grab-executives-quit-as-company-rejigs-unit-to-stem-losses-sources