In America, if you’re hearing about the Grab IPO, one of the easiest ways to understand the company is that it’s the Uber of Southeast Asia. However, due to exponential growth, not only would those in Southeast Asia consider Uber to be the Grab of America, Grab has expanded its services beyond just ride-sharing. Grab is an on-demand transportation, delivery and financial platform. The platform can be used for on demand bikes, cars, electric cars, disabled-accesible transportation services, food delivery, and more; as well as insurance, banking, loans and investment.
Within a year of starting in Malaysia, it had 50,000 drivers and 10,000 bookings a day. In 2020, they had 1.9 billion transactions on what they call the #1 Super App in Southeast Asia and over 5 million drivers and other partners. According to company statements, Grab provides an ‘all-in-one platform for everyday needs and everyday entrepreneurs’.
TL;DR
- Anthony Tan and Tan Hooi Ling co-founded the company in 2012. Anthony Tan is the CEO; Tan Hooi Ling serves as the COO.
- Initially it was an on-demand taxi service via an app called MyTeksi in Malaysia. It was rebranded as GrabTaxi.
- Between 2013-2017, they expanded to Singapore, Thailand, the Philippines, Vietnam, Indonesia, Cambodia and Myanmar.
- Between 2014-2021, they added: GrabCar, GrabBike, GrabExpress, GrabShare, GrabCoach, GrabFamily, GrabPay, GrabFood, GrabAds, GrabPet, GrabKitchen, GrabMart, GrabFinance, GrabInsure, GrabInvest, GrabDefence and GrabAssistPlus (helping disabled passengers).
- The company has been in the news after incidents where Grab drivers were accused of assaulting female passengers; assaulted by traditional taxi drivers; and targeted and harmed by brutal robbers. Grab’s company policies condemn these behaviors and cooperate with local authorities to ensure perpetrators are caught.
- In 2018, Grab acquired Uber’s Southeast Asia business segment and iKaaz Corporation (a cashless payment platform).
- In 2019, Grab released its current super app.
- In 2020, Grab acquired Bento Invest Pte Ltd (a digital wealth management and robo advisory services for businesses) and Singapore selected them for a digital banking license.
- Total fundraising has exceeded $13 billion in 27 rounds of investor and private funding. Leading investors include SoftBank, Didi Chuxing and Uber.
- Grab uses a measure of sales called Gross Merchandise Value (GMV). In 2017, GMV reached $1billion. 2018 GMV was $5 billion. 2019 GMV was $10 billion and adjusted net revenue was $1billion. 2020 GMV reached $12.5 billion.
- Grab is seeking a $4.5 billion IPO in July 2021 with a valuation of 39.6 billion in conjunction with it’s SPAC-merger with Altimeter. It’s last valuation was $16 billion in January 2021.
- It will be traded with the stock symbol ‘GRAB’ on the Nasdaq.
Related:What is a SPAC?
Grab at a glance
Power couple Anthony Tan and Tan Hooi Ling met at Harvard Business School (HBS) and co-founded the company in 2012. They were inspired by the rise of ride-hailing services in America and crucially aware of the need in their home country of Malaysia. Anthony Tan shared that his entrepreneurial journey started with a simple question: “How can I best take care of other people?”. His family has a long history in the automotive industry – his father owns a successful automotive company and his great-grandfather was a taxi driver. Prior to founding Grab,Tan Hooi Ling’s work experience included Eli Lilly and McKinsey and Company.
The couple entered the HBS New Venture Competition in 2011 with their on-demand taxi-service mobile application (app) for Malaysia and placed second- winning a $25,000 grant. They combined the grant with personal funds of Anthony Tan to launch the app called MyTeksi. They have steadily gained recognition for how they run their business. They were honored at the Florin Awards 2016, Global Payment Summit for their award-winning wallet security. They have been certified GrabPay: PCI DSS Level 1 compliant for achieving and maintaining the highest standard of security for payments. They have achieved ISO 9001:2015 Quality Certification – the first in the ride-hailing industry globally.
There are four elements to their guiding principles which they call The Grab Way: Heart, Hunger, Honor and Humility. They work hard, stay humble, help others and always seek to deliver value at a high standard. Their mission is to ‘drive Southeast Asia forward by creating economic empowerment for everyone.’ They use the 4 H principles to stay on mission.
Grab’s sales trajectory has been one of growth with no stalling – even growing overall during the coronavirus pandemic. They report their sales using a measure called Gross Merchandise Value (GMV). In 2017, GMV reached $1billion. By 2018, GMV was $5 billion. By the end of 2019, GMV reached $10 billion. Despite the pandemic, 2020 ended with GMV at $12.5 billion. As of November 2020, the company reported 198 million downloads of their app, 9 million drivers throughout 350+ cities in eight countries and a $14 billion valuation.
Their brand appears undamaged by incidents where drivers assaulted passengers or were assaulted by jealous traditional taxi drivers. They have had some regulatory hurdles to surmount; but they have been navigating them as well. The company received the support of the Malaysian Public Land Transport Commission with their app and is working in partnership with them to enhance the public perception of taxi drivers. In the Philippines, they have temporarily stopped operations of GrabBike following a government order affecting not just Grab but other motorcycle and bicycle taxi services. The Department of Transportation in the Philippines has not yet created guidelines regarding the use of bikes and motorcycles as a public mode of transportation, and until they do, none of these companies will be allowed to operate legally.
The Vietnamese Ministry of Transport has initiated new regulations to ensure a fair business environment to quell concerns that app-based ride-hailing services such as Grab and Uber unfairly weren’t subject to the same rules as traditional taxi drivers. In Thailand in 2016, similar concerns temporarily halted Grab and Uber; but new rules have not been imposed because of the popularity with consumers and foreign visitors. In 2017, Land Transport Authority in Singapore ruled private hire cars affiliated with Uber or Grab are not exempt from child seat requirements and need to have a Vocational License; Grab has complied.
The company started in Malaysia and has expanded both in terms of services provided and in where they provide services. Now the Everyday Everything, Super App is the #1 Super App in Southeast Asia. It provides deliveries of restaurant and home-cooked meals, parcel delivery services, transportation services, digital wallet and card, digital insurance, investing, loans, credit, paying bills and digital advertising. As of April 2021, Grab provides services in more than 400 cities in eight countries. There are more than 25 million monthly users engaging in transactions. There are more than 5 million driver partners and 2 million merchant partners.
Grab’s mission of providing a safer everyday for everyone is demonstrated in how they give back to the communities they serve. They call their social impact efforts, GrabForGood. It is a multi-pronged effort including digital literacy, safety, the environment and COVID-19. Grab teamed up with Microsoft to provide free digital literacy programs to over 500,000 participants. In Singapore, they held more than 30 digital literacy clinics for over 3000 senior citizens. In terms of safety, they have trained over 400,000 drivers to recognize and intervene in human trafficking as well as conducting over 1.4 million general driver road safety trainings. They support the environment by having the default for their food delivery services set to opt out of plastic cutlery and therefore have prevented the waste of 95 million pieces of cutlery. They also have been leaders in Singapore by introducing hundreds of electric vehicles.
Due to COVID-19, the company committed $40 million and launched initiatives to support their partners. They distributed over 2 million gloves, masks and sanitizers to their partners. Grab implemented hygiene protocols including: cashless payments, contactless delivery and temperature screening. They enabled their app to assist governments’ contact tracing and their financial payment capacity supported government financial aid reaching those affected.
Grab fundraising to know about
Through 27 rounds of investor and private funding, Grab has raised more than $13 billion. Leading investors include SoftBank, Didi Chuxing and Uber. Here’s a breakdown of key Grab fundraising:
- Seed Round: In 2011, they received a $25,000 grant after placing second in the HBS New Venture Competition.
- Series A: April 2014, the company secured $10 million in funding from Vertex Ventures
- Series B: May 2014 $15 million, from GGV Capital, Qunar and Vertex Ventures
- Series C: October 2014, the company raised $65 million from Tiger Global, GGV Capital, and Vertex Ventures
- Series D: December 2014, Grab raised $250 million from SoftBank Group
- Series E: August 2015, Grab raised $350 million from a range of investors including Didi Chuxing and China Investment Corporation
- Series F: September 2016, Grab raised $750 million from SoftBank, Didi, and Honda.
- Series G: July 2017, Grab raised $2.5 billion from SoftBank, Didi, and Toyota with a $6billion valuation
- Debt: October 2017, $700 million from HSBC
- Series H: June 2018, Raised $1 billion from Vulcan Capital, Toyota Motor Corporation; with a $10billion valuation
- Series H: August 2018, Raised $1billion from Lightspeed Venture Partners, SoftBank Capital, Vulcan Capital, China Cinda Asset Management, Toyota Motor Corporation, Macquarie Capital, All-Stars Investment, Ping An Capital, OppenheimerFunds, Mirae Asset Global Investments; with a $11 billion valuation
- Private: October 2018; Microsoft; undisclosed
- Series H: October 2018, raised $200 million from Booking Holdings
- Series H: November 2018, raised $250 million from Hyundai Motor Company
- Series H: November 2018, raised $50 million from Kasikornbank
- Series H: December 2018, raised $150 million from Yamaha Motor Co.
- Series H: January 2019, raised $175 million from Tokyo Century
- Private: January 2019 $200 million from Central Group
- Series H: March 2019, $1.5 billion from David Thevenon, SoftBank Vision Fund
- Series H: June 2019, $300 million from Invesco, $15 billion valuation
- Private: Feb 2020, $706 million from Mitsubishi UFJ Financial Group, Inc.
- Private: February 2020 $150 million from TIS INTEC Inc.
- Private: August 2020 $200 million from Stic Investments
- Private: Jan 2021 $300 million from GGV Capital, Arbor Ventures, K3 Ventures, Flourish Ventures, Hanwha; Valuation $16 billion
- Anticipated IPO: July 2021, SPAC-merger, and IPO seeking $4.5 billion, $39.6 billion valuation.
Path to Grab IPO
Grab has had a 10 year path to its IPO. Their road started from coming in second place at a graduate school business competition and has led up to now where Grab is running a superapp in eight countries in Southeast Asia providing services in three segments: delivery, financial services and mobility. Mobility has had positive growth; the delivery and financial services segments are growing quickly. Grab has 72% of the market share in ride-hailing, half the online delivery market share and nearly 25% of the digital-wallet payment market in 2020.
Grab has surpassed unicorn status. It is Southeast Asia’s first “decacorn” – a startup with a valuation of over $10 billion. The company’s CEO has been on record as being open to an IPO at least since 2014 when he said they would consider an IPO when the number of bookings through the app reached 2 million a day. With 1.9 billion transactions in 2020, they are above 5 million a day. One thing unique about their IPO is it will be done in conjunction with a SPAC-merger with Altimeter. SPAC stands for Special Purpose Acquisition Company. CEO TAN will control 60.4% of the company’s voting power after its merger. They anticipate going public in July 2021; the IPO values the company at $39.6 billion and they are expecting to raise $4.5 billion.
When is the Grab IPO?
The IPO is expected in July 2021 after the merger with Altimeter is completed. Brad Gerstner, CEO of Altimeter, is excited to merge with Grab due to its leading position in Southeast Asia where tech-fueled economic changes are still in their infancy. He says, “We’ve already seen this movie – how profit and growth has unfolded in the US, China, Europe and Latin America and we’re now seeing that and better in South East Asian markets. They really are at the forefront of the digital transformation in the region.”
The merger brings $4 billion from Altimeter and funds from leading investors including Blackrock, T Rowe Price, Fidelity. CEO Tan stated, “Despite COVID-19, we’ve come out of 2020 stronger than ever, demonstrating the resiliency of our business. Going public now will give us wind in our sails to accelerate our mission.”
What investors should know about the Grab IPO
All investments carry risk. The important thing is to consider what risks may be specific to Grab’s IPO. Grab’s partner, Altimeter Growth, is a SPAC established with the purpose of finding a private firm to merge with and then take public on the stock market. Silicon Valley-based venture capital company Altimeter Capital Management, started Altimeter Growth in 2020. It has backed firms such as Uber and Zillow.
Grab highlighted how its reverse merger is unlike other such deals by pointing out Altimeter’s shares will be subject to a three-year lockup period, a much longer than usual term for similar transactions and highlights their confidence in Grab’s long-term potential. Following the merger, they will create a new holding company for the combined business entity.
The company faces stiff competition in each of their business segments and in each of their markets from homegrown competitors. Additionally, they have never posted a profit. By expanding into financial services, it exposes Grab to different additional regulatory and market risk than they were already exposed to in the transportation industry. Their business success depends on the end consumer being able to use their app across multiple platforms: cell phones, tablets and computers.
With the advent of their financial services, there is potential for growth in the market because more than 6 in 10 Southeast Asians are unbanked or underbanked. Grab Financial Group aims to empower everyone with simple, transparent, and flexible financial products. Because Grab uses a diversified business model across the 8 countries it operates in, no one single country provides more than a third of the adjusted net revenue. This protects the company from being too reliant on one particular country for sustainability.
The company has not been immune to the impact of the global COVID-19 pandemic. In April 2020, top management salaries were slashed by 20% and employees were encouraged to use voluntary, unpaid leave. Two months later, Grab cut over 300 employees – 5% of the employee base across Southeast Asia. At the same time, they implemented GrabProtect – new hygiene and safety measures which include updated safety policies and provide hygiene kits to drivers and passengers. After making those painful cuts, Grab emerged from the pandemic economic crisis. with higher than pre-pandemic sales in 2019 and more than double those of 2018.
Bottom line
Grab company’s anticipated spac-merger with Altimeter and expected $4.5 billion July 2021 IPO is not just huge for Southeast Asia, it is huge in any market. For example, 2019 saw 8 US IPOs in excess of $1 billion – none as large as this, however. Of them, 3 had a positive return in the ensuing year, 1 broke even and the other 4 posted losses in the 20-40% range. Spacs are sometimes called “blank check companies” and have grown in popularity in the past few years. They are considered to be both faster methods of going public and ones involving less public scrutiny. Grab plans to benefit from regional trends in the growth of ride-hailing and delivery services and the economic disruption of digital financial services in Southeast Asia. Investors are hoping it will capitalize on this growth while reaching profitability.