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Grab agrees to world’s largest SPAC deal, $40 billion value

Yahoo Finance’s, Akiko Fujita, Brian Sozzi and Myles Udland break down Grab Holdings’ record-setting SPAC merger.

Video Transcript

[MUSIC PLAYING]

BRIAN SOZZI: Grab Holdings said today it will merge with a stack in a record setting nearly $40 billion deal, and the Southeast Asia ride-sharing and food delivery company will debut over at the NASDAQ. Yahoo Finance anchor, Akiko Fujita, is here covering this deal for us. Akiko, I had to do a double take on the valuation. Wasn't Grab just valued at $15 billion?

AKIKO FUJITA: Yeah, this is a huge bump. $40 billion valuation with that merger with Altimeter Capital, and the merger comes with a fundraising component as well. So, we're talking about Grab raising $4 and 1/2 billion in cash. Altimeter leading the investment round with $750 million. We've also got other investors, including BlackRock, Counterpoint Global, and then the sovereign wealth funds of Malaysia, Singapore, and Abu Dhabi joining in on that investment round.

This is by far the largest listing by a Southeast Asian company in the US. And it really speaks to the growth that Grab has seen since it was first established back in 2012. Bringing on board big name backers, like SoftBank's Vision Fund, as well as Alibaba. Remember, it acquired UBER's operations in Singapore back in 2018, and since then, it has evolved into this super app. Not just offering ride-hailing, but also food and grocery deliveries, as well as financial services.

Ultimately, they have notched more than 214 million app downloads in eight Southeast Asian countries. Gross merchandise value last year coming in at $12 and 1/2 billion. 25 million monthly transacting users and the addressable market here. We're talking about eight countries in Southeast Asia.

So, 650 million people, more than double what there is in the US. Like many startups, Grab is not profitable yet, although the company says that it is profitable for the ride-hailing services, at least on an EBITDA basis. Earlier this year, we had Moody's coming out slapping a B3 credit rating on the company, saying, Grab is not likely to be profitable until 2023.

And of course, all this comes as a lot of these stocks come under scrutiny with the SEC. Taking a closer look at those transactions, but certainly a big day for the company. And we're talking about ride-hailing in Southeast Asia, but there's another name that's coming online. Didi Chuxing, of course, the big player in China, reportedly filing for an IPO as well. So, look out for that one too.

MYLES UDLAND: Well, you know, Akiko, it's interesting to see this-- this deal come out just, what, a handful of days, think that big speech the SEC was last Thursday on how they're viewing some disclosures around SPACs. But I guess, when you think about the deal, and you went through some of the numbers, I mean, it's just sort of a classic 2010 style VC play. The TAM is huge. The losses are huge.

The downloads have been rapid. And looking at the sponsor here, Altimeter, they've had a couple of big wins over the last handful-- just in the last couple of quarters. And so, it seems like with all that swirling around, it might just be the right sponsor at the right time. And I'll be interested just to see how it's received in the market. We've seen shares of the SPAC that trades right now, the [INAUDIBLE] growth SPAC. They've been a little noisy this morning.

AKIKO FUJITA: Yeah, I mean, no question about that. Grab, of course, has gotten a lot more attention in the US, largely because of that merger that happened back in 2018. UBER still has a stake in the company as well as a result of that merger. So, you're right. If you look at the addressable market, it's certainly a significant one.

We don't talk about that region much on Yahoo Finance, but it is a fast growing one. 650 million monthly users there, or 650 million population in terms of the addressable market. And Grab certainly not the only one in the market. They face a lot of competition. So, we certainly have to see how they perform on the back of this listing in the US.

BRIAN SOZZI: Yeah, pretty big deal here to keep an eye on. Akiko Fujita, thanks so much.

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