Should you invest in Grab? On 14 Apr 2021, Grab Holdings announced it will be listed on NASDAQ via a special purpose acquisition company (SPAC) called Altimeter Capital Management (NASDAQ: AGC). Grab plans to go public in the US by July 2021.
Another platform going public
The announcement by Grab Holdings represents yet another opportunity for investors to jump into a fast growing platform. We have seen how platforms like SEA Limited (HKG: 0251, owners of Shopee), Uber (NYSE: UBER), Deliveroo (LON: ROO) have all been listed amidst high expectations of returns. These platforms are all pretty similar. There is no real need to explain their nature of business. It is pretty entrenched into ours daily lives already as I have mused about here. Understanding what the company does (or at least roughly) is simple. Deciding on investing in the company (in this case invest in Grab) – at the right place and the right time is much more challenging.
A look at how Grab competitors fare
To provide some perspectives, let’s take a look at the historical prices of Grab’s competitors since they were listed.
It’s quite a mixed bag isn’t it. Uber has been hovering around it’s IPO price. While SEA Limited price shot up since IPO, Deliveroo went down significantly from IPO price. In fact, Deliveroo is now down nearly 36% from it’s IPO price. The fanfare and vibes does not translate into a sure bet.
So what’s the (remaining) story with Grab?
There are probably 3 areas that Grab is looking at for growth – and key considerations to invest in Grab.
- Grow regionally. Currently, Grab only has a strong foothold in South-East Asia countries such as Singapore, Malaysia, Indonesia. There will be the possibility to compete in other regional markets.
- Grow organically via offering of new services. Beyond GrabPay, GrabCar and Grabfood, Grab is looking into Digital Banking in Singapore with a local Telco (Singtel). GrabMart and GrabShopping hasn’t really take off yet but looks promising as Grab increasing becomes the “Everyday App”.
- Grow unconventionally. Disrupt the ecosystem more. Grab’s ability to innovate and evolve at pace puts it in an area to capture the Blue Ocean. Potential areas is up for anyone’s guess (Microfinancing? Blockchain? Jobs Bank?)
Altimeter Growth Corp (AGC)?
So with all the growth potential, why is GRAB looking to be listed? What benefit does it bring to the company and to it’s owners?
Being a listed company does bring additional credibility to GRAB Holdings as well as more flexibility to tap into markets for eventual funding. Tying up with a SPAC is an icing on the cake – it can lower the cost of listing, speed up the listing timeline and also requires less red tapes/disclosures (some of which might actually be business sensitive).
Time to grab Grab Holdings? (not a typo)
It has been a sort of mini rollercoaster since Grab announced their merger with Altimeter Growth Corp (AGC).
SPACs are typically priced at $10 per share. As you can see in the chart above, AGC’s share price has swung from a high of $16.75 to $11.35 currently. Note that even at $10 per share, this values Grab at $39.6 billion (which considering the growth potential seems fairly valued already). So further upside will really be driven from new markets or business model that Grab can operate and profit successfully. The digital banking segment might just spring that surprise.