Analysis

Will Grab justify its valuation ?

, Economic times

Singapore's Grab more than doubled its valuation to $40 billion in about a year as part of the world's largest SPAC deal, but maintaining that level after its U.S. debut will be a test not only for investors but also for firms eyeing similar listings. Private fundraisings involve fewer investors who often bankroll big valuations. Analysts are now scrutinising whether Grab can justify its valuations by turbocharging growth in its existing businesses and successfully foraying into digital banking.

Three dozen-plus firms including BlackRock, Fidelity International, Temasek and wealthy Indonesian families funded the so-called $4 billion private investment in public equity (PIPE) in Grab that includes $750 million from Altimeter. They joined existing investors such as SoftBank Group Corp's Vision Fund, Uber, Didi Chuxing and Toyota Motor, who have helped founders Anthony Tan and Tan Hooi Ling raise $12 billion since Grab started in 2012.

Just after the pandemic started last year, Grab slashed costs and boosted food deliveries as demand surged. Then months later, it tapped JPMorgan and Morgan Stanley, its partners for many years, for a traditional IPO aimed for this year, sources said. But after getting interest from SPACs, Grab began to seriously consider Wall Street's hottest investment structure and turned to boutique investment bank Evercore to choose SPACs.

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