Altimeter Growth (AGC) Taking Grab Public In $39.6 Billion Deal

By Amit Chowdhry ● Apr 13, 2021
  • Leading Southeast Asia super app Grab Holdings is going public in partnership with Altimeter Growth Corp. (Nasdaq: “AGC”). These are the details.

Grab Holdings — the leading superapp in Southeast Asia — announced it intends to go public in the U.S. in partnership with Altimeter Growth Corp. (Nasdaq: “AGC”) in what is expected to be the largest-ever U.S. equity offering by a Southeast Asian company. And the combined company expects its securities will be traded on NASDAQ under the symbol “GRAB” in the coming months.

The proposed deals are going to value Grab at an initial pro-forma equity value of approximately US$39.6 billion at a PIPE size of over US$4 billion and will provide Grab with approximately US$4.5 billion in cash proceeds.

Grab is known as a superapp that is focused on serving everyday needs and everyday entrepreneurs. The company’s app offers services across mobility, deliveries, financial services and more, in an all-in-one app.

Grab believes it is well-positioned to serve the needs of consumers, merchants, and drivers in Southeast Asia through its superapp strategy. The company offers an ecosystem of complementary services, addressing high-frequency, everyday needs, all through one app. And this creates a flywheel effect designed to drive growth while lowering the cost of service.

The more services offered, the more the choices, and the greater the value to consumers using the Grab superapp. Plus the proportion of Grab users that use 2 or more services has grown 5 times over the last two years. And as consumer spending grows, so do the income opportunities for Grab’s merchant and driver-partners, encouraging more of them into Grab’s ecosystem. This leads to a wider selection, better value, and faster delivery times for users, with benefits to consumer loyalty and lifetime value.

Grab’s decision to go public was driven by strong financial performance in 2020 despite COVID-19. Specifically, Grab posted GMV of approximately US$12.5 billion in 2020, surpassing pre-pandemic levels and more than doubling from 2018. And the company is also currently the category leader in Southeast Asia for its core verticals, accounting for approximately 72% of total regional GMV for ride-hailing, 50% of total regional GMV for online food delivery and 23% of regional TPV for digital wallet payments in 2020.

The company has made significant strides towards profitability with a key focus on building a resilient business and delivering sustainable growth, achieving positive segment EBITDA6 in mobility across all markets, and positive segment EBITDA in deliveries in 5 out of 6 countries.

Proposed Transactions Overview

Grab’s journey to becoming a U.S.-listed public company is going to be facilitated by a definitive business combination agreement between Grab and Altimeter Growth, a special purpose acquisition company (SPAC). Pursuant to the proposed transactions, Altimeter Growth and Grab will become wholly-owned subsidiaries of a new holding company. The combined company is expected to have an equity value on a pro-forma basis of approximately US$39.6 billion.

And at closing, the combined company is expected to receive approximately US$4.5 billion in cash proceeds, including more than US$4 billion from a fully committed PIPE offering that was upsized due to significant investor interest. Plus Altimeter has also committed up to US$500 million to a contingent investment to be equal to the aggregate dollar amount of redemptions from Altimeter Growth’s shareholders. 

The PIPE was led by funds managed by Altimeter Capital Management, LP (which committed US$750 million) with participation from funds and accounts managed or advised by BlackRock, Counterpoint Global (Morgan Stanley Investment Management), and T.Rowe Price Associates, as well as Fidelity International, Fidelity Management and Research LLC, Janus Henderson Investors, Mubadala, Nuveen, Permodalan Nasional Berhad, and Temasek. Leading family groups from Indonesia including Djarum, the Sariaatmadja family, and Sinar Mas also participated in the PIPE.

And as part of Altimeter’s long-term commitment to Grab, Altimeter’s sponsor promote shares are subject to a 3-year lock-up period. Plus Altimeter is also donating 10% of its sponsor promote shares to support the GrabForGood fund – which aims to introduce programs with long-term social and environmental impact, including education, financial support for underserved communities, and environmental issues. The GrabForGood fund was announced last week with an initial fund size of US$275 million, including a personal contribution of US$25 million in Grab shares from Grab Group CEO and co-founder Anthony Tan, together with co-founder Hooi Ling Tan and President Ming Maa.

The proposed deals – which have been approved by the boards of directors of both Grab and Altimeter Growth – are expected to close in the coming months, subject to shareholder approvals, and other customary closing conditions.

KEY QUOTES:

“It gives us immense pride to represent Southeast Asia in the global public markets. This is a milestone in our journey to open up access for everyone to benefit from the digital economy. This is even more critical as our region recovers from COVID-19. It was very challenging for us too, but it taught us immensely about the resiliency of our business. Our diversified superapp strategy helped our driver-partners pivot to deliveries, and enabled us to deliver growth while improving profitability. As we become a publicly-traded company, we’ll work even harder to create economic empowerment for our communities, because when Southeast Asia succeeds, Grab succeeds.”

“We’ve always believed in long-term partnerships to drive impact at scale. We work closely with governments to support their national agendas, and have partnered with some of the world’s best blue chip companies. Altimeter is investing in a way that demonstrates our aligned values, with a three-year lock-up on their sponsor promote shares and unprecedented contribution of shares to our new GrabForGood endowment fund. They’re joining our journey for the long-run, together with an incredible day one cap table of renowned institutional investors and sovereign wealth funds. This is testament to the global investment community’s belief in the long-term value proposition of Grab’s superapp strategy and the exciting growth potential of Southeast Asia.”

— Anthony Tan, Group CEO and Co-founder, Grab

“As one of the world’s largest and fastest-growing internet companies, Grab is paving the digital path forward for the 670 million citizens of Southeast Asia. We are thrilled that Grab selected Altimeter Capital Markets as their partner to go public and even more excited to become sizable long term owners in this innovative, mission driven company.”

— Brad Gerstner, Founder and CEO, Altimeter