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Grab Holdings Inc., the dominant ride-hailing app in Southeast Asia, announced in April 2021 that it would be merging with a special purpose acquisition company (SPAC) that will value it at $39.6 million. It marks a milestone for the car sharing app startup, which has seen its valuation more than double in the past 18 months.

Singapore based-Grab announced that it would merge with Altimeter Growth Corp., a SPAC sponsored by Silicon Valley venture capital firm Altimeter Capital. The nearly $40 billion deal would make it the largest SPAC deal to date.

Explosive Growth

Grab started as a taxi-hailing app in 2012, but has since expanded its service offerings. Grab now offers other modes of transportation such as motorcycle taxis (GrabBike), private car services (GrabCar), social carpooling (GrabHitch), and on-demand carpooling (GrabShare). In addition, the company has branched out into e-payment (GrabPay), package delivery (GrabExpress), and grocery delivery (GrabMart).

Grab became the first unicorn in the Southeast Asian region. The company’s investors include Softbank, Uber Technologies, Didi Chuxing, and Toyota. Didi Chuxing is one of the leading ride-hailing platforms in China.

Their services are available in eight Southeast Asian countries—Singapore, Indonesia, the Philippines, Malaysia, Thailand and Vietnam, Myanmar, and Cambodia. Grab also has engineering hubs in Beijing, Seattle, and Singapore.

The app has more than 214 million downloads. Grab saw its delivery service increase in popularity during the pandemic, enabling drivers to shift from picking up passengers to carrying deliveries.

Like many high growth startups, Grab has not reached profitability yet. Last year, it reported losses of $0.8 billion on an EBITDA basis. EBITDA, or earnings before interest, tax, depreciation and amortization, is a common accounting measurement for assessing a company’s current profitability. Grab projects revenue growth of 40% annually for the next few years. Based on those financial projections, Grab will become a profitable company in 2023.

Grab Founding Journey

Anthony Tan and Tan Hooi Ling co-founded Grab in 2012. Both Anthony Tan and Tan Hooi Ling were students attending Harvard Business School when the idea arose. Anthony Tan had approached Tan Hooi Ling about the idea, but she initially was skeptical of working with him due to her preconceptions of his large family wealth.

The pair, both Malaysian entrepreneurs, started the company in Kuala Lumpur, Malaysia. The headquarters were moved to Singapore in 2014 after receiving financing from the Singaporean government’s investment fund Temasek. Anthony Tan serves as Chief Executive Officer while Tan Hooi Ling serves as Chief Operating Officer of the company.

They started off with a modest $10 million Series A funding round in April 2014. A $15 million Series B round followed in May 2014. Both the Series A and Series B rounds were led by Asian venture capital firms. Things started to pick up once Grab attracted the attention of international investors. In October 2014, Grab raised a $65 million Series C. This financing round was led by U.S. based hedge fund Tiger Global. The momentum picked up even further from there, and Grab scored a major breakthrough in December 2014 with an investment from SoftBank. The Japanese multinational conglomerate SoftBank made a $250 million investment in Grab’s Series D round. At the time, it was the largest investment made into a Southeast Asian tech company on record.

The SPAC Deal

Altimeter Capital has been involved in some of the trendiest IPOs and late-stage company transactions over the past year. For example, Altimeter led a $250 million financing round in Roblox, the videogaming platform popular among children and teens. With approximately $16 billion under management, Altimeter decided to commit over $4 billion of financing in the Grab deal. The deal includes a number of prominent investors such as BlackRock, T. Rowe Price Associates, and Morgan Stanley’s Counterpoint Global. Sovereign wealth funds are also making contributions, including Singapore’s Temasek, Mubadala of Abu Dhabi, and Permodalan Nasional Berhad of Malaysia.

Set to close in July, the Grab SPAC deal contains certain unique terms. For example, the shares held by Altimeter Capital are subject to a three-year lock-up period. The standard lock-up period is six months for pre-IPO investors. The three-year lock-up period signals confidence in the long-term growth potential of the ride hailing company.

Although based in Singapore, Grab strategically chose to list on a U.S. stock exchange because it wanted broader market access. However, they may opt for a dual-listing down the road, similar to other Asian tech giants. For instance, Alibaba stock is listed on the New York Stock Exchange (NYSE) and has a secondary listing on the Hong Kong Stock Exchange. Similarly, Baidu is listed on NASDAQ and also has a secondary listing on the Hong Kong Stock Exchange.

Tan Hooi Ling, Grab’s co-founder, stated, “For us, the U.S. listing is important because it gives us access to the widest global base of liquidity. At the same time, we’re still exploring alternatives on whether we can do a concurrent listing locally as well, and those are still existing conversations we are exploring.”