HONG KONG (AP) – Southeast Asia’s largest ride-hailing company, Grab Holdings, said Tuesday that it plans to merge with U.S.-based Altimeter Growth Capital in a deal that would value it at nearly $40 billion in preparation for an initial public offering in the U.S.
That would make it the largest SPAC merger ever, more than double current record-holder United Wholesale Mortgage’s $16 billion mergers in January.
Grab’s an agreement to list via a particular purpose acquisition company, or SPAC – a shell company set up to raise money through an IPO to acquire another company – already has drawn more than $4 billion in private investment in public equity from a group of investors including Fidelity International and Singapore’s Temasek Holdings.
At closing, the combined company is expected to receive about $4.5 billion in cash proceeds and will be valued at about $39.6 billion, according to a statement.
The merger will make Grab the most valuable Southeast Asian company to list shares in the U.S.
Under the deal, Altimeter‘s shares will be subject to a 3-year lock-up period showing its commitment to Grab.
“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,” Grab CEO Anthony Tan said in a statement. Brad Gerstner, founder and CEO of Altimeter described Grab as one of the world’s largest and fastest-growing companies. “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,” Gerstner said in a statement.
SPAC mergers have gained popularity over the last year as they allow companies to go public and gain capital more cheaply and more quickly than using a conventional IPO process. When the SPAC acquires a target, the acquired company takes the SPAC’s spot on an exchange and typically gets a new stock ticker.
A traditional IPO requires a company to hire an investment bank, produce mountains of materials for investors to scrutinize, and eventually talk to potential investors in roadshows before going public.
Singapore-based Grab, founded by Tan and co-founder Tan Hooi Ling (no relation) in 2012, began as a ride-hailing company but later expanded into offering other services such as deliveries of groceries and take-out meals, digital payments, and financial services.
The company was last valued at over $14 billion after a $1.5 billion cash injection from Japan’s SoftBank in 2019.
The SPAC company, Altimeter Growth Capital, is a so-called blank-check company sponsored by Altimeter Capital Management, a technology-focused investment firm based in California. According to an SEC filing, Altimeter Growth Capital was incorporated in Aug. 2020.
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