Grab Holdings, Southeast Asia's most valuable startup, is going public in the U.S. through the largest-ever merger with a blank-check company.
The Singapore-based startup is set to have a market value of about $39.6 billion after the combination with Altimeter Growth Corp., the special purpose acquisition company of Brad Gerstner's Altimeter Capital Management, the firms said in a statement Tuesday. Grab is raising more than $4 billion from investors including BlackRock, Fidelity International and T. Rowe Price as part of the biggest U.S. equity offering by a Southeast Asian company.
The deal would make the ride-hailing and food-delivery giant the first Southeast Asian tech unicorn to go public through a SPAC and give it funds to expand. Grab is trying to take advantage of a U.S.-led SPAC listing boom even though it's showing signs of slowing amid increased scrutiny by regulators.
"This is definitely one of the best internet companies," Mr. Gerstner said in an interview. "The runway ahead is very long and very wide for Grab if they continue to execute."
The combined entity's stock will trade on the Nasdaq in the coming months under the ticker GRAB. Altimeter Capital, which orchestrated the initial public offering of Altimeter Growth in September, is putting $750 million into the company, about a fifth of the fresh funds raised.
That, together with a three-year lockup period for its sponsor shares, indicates Altimeter's long-term commitment to the company, Grab CEO Anthony Tan said. Altimeter, which manages $15 billion of assets, has also committed as much as $500 million to a contingent investment to be equal to the total amount of redemptions by Altimeter Growth's shareholders.
"From sovereign wealth funds to mutual funds, it is world-class investors who are investing in us," Mr. Tan said in an interview. "The world is seeing the potential of Southeast Asia and how exciting this region is."
Grab, the market leader in Southeast Asia for so-called super apps for consumer services, expects its addressable market to expand to more than $180 billion by 2025 from $52 billion in 2020. Its total gross merchandise volume last year was $12.5 billion, more than doubling from 2018 even as competition from arch rival Gojek intensified and the coronavirus pandemic restricted people's movements.
The deal marks a remarkable turn for Grab. Under pressure from SoftBank Group Corp. and other investors, the company had been negotiating a possible merger with Indonesia's Gojek for most of 2020. But the talks ultimately collapsed around December and Gojek began talks with Tokopedia, another local internet giant.
Messrs. Tan and Gerstner, both Harvard Business School graduates, began talking about a deal early this year after being introduced by common friends. Only about three months later, they reached an agreement for the record transaction.
Among companies participating in the cash injection, a so-called private investment in public equity, or PIPE, are Janus Henderson Group, Nuveen and Singapore's state-owned investor Temasek, which had S$306 billion ($214.6 billion) in assets as of March 31, 2020. The expected market value also reflects the PIPE and SPAC proceeds of $4.5 billion as well as a $2 billion term loan, according to Grab.
Evercore, J.P. Morgan Chase and Morgan Stanley advised Grab in the deal.