Sources familiar with the matter reported to Reuters that the giant Grab, the hail truck and grocery supplier, is reviewing a listing in the US this year.
According to one source, the initial public offering (IPO) could raise at least $ 2 billion (S $ 2.66 billion).
This means that it is likely to be the largest overseas share offering by any Southeast Asian company.
The sources, who refused to be named, added that the plans were not finalized and would depend on market conditions.
Singapore-based Grab is currently the region's most valuable start-up valued at more than USD 16 billion (S $ 21.31 billion).
Grab currently operates in eight countries – Singapore, Cambodia, Indonesia, Malaysia, Myanmar, Thailand, Vietnam, and the Philippines.
Its services are present in more than 500 cities in Southeast Asia.
What an IPO means for Grab
In 2019, Anthony Tan, CEO of Grab, told CNBC that the company would not go public until its entire business was profitable.
Currently, only the hail business is balanced in all markets in which it is present.
However, Grab is reported to pay up to $ 2.2 billion (S $ 2.93 billion) to Uber if it doesn't go public by March 25, 2023.
According to Uber's IPO prospectus, Uber has the option of exercising a redemption right to “return all or part of its investment to Grab at any time after the repayment date … for cash”.
With a redemption right, investors can induce the company to buy back their shares after a certain period of time.
This could be a reason for Grab & # 39; s decision to go public this year.
Even so, an IPO should be beneficial to Grab's future growth as the money can be used to fuel the business in the form of expansion into new markets or industries.
Additionally, the prestige of being listed on a major stock exchange is a key motivator for some companies that choose to go public.
This is especially true for Grab as they chose to list in the US instead of the Singapore stock exchange.
Chinese companies like Alibaba have also chosen to go public in the US rather than their home countries.
Other motives are more freedom of movement, which can simplify future acquisitions of US companies
See break-even and growth despite a pandemic
Photo credit: Tech Wire Asia
Grab said its ride-hail business is balanced in all markets it is present in. It also expects to break even in food delivery by the end of 2021.
"We expect our grocery delivery business to break even by the end of 2021, after posting positive EBITDA in several countries in Q2 2020," said Grab President Ming-Maa.
In addition, Grab has successfully achieved its growth and profitability goals.
The company cut EBITDA spending by around 80 percent last year and hit breakeven for the hail in all of its operating markets, including Indonesia, which is home to its biggest rival Gojek.
The company also provides financial services, and its consortium with Singtel has been granted a full digital banking license from the Monetary Authority of Singapore.
Grab & # 39; s merger with GoJek
Photo credit: Asia Nikkei
Last month it was reported that "progress" was being made on the merger talks between Grab and Gojek.
However, all discussions have come to an impasse after both parties disagreed on certain issues related to control of the combined Grab-Gojek unit.
Bloomberg later reported on Jan. 5 that Gojek was in advanced merger talks with Tokopedia, one of the largest e-commerce websites in Indonesia.
According to the report, the merger could be completed in the coming months. The combined company plans to be listed in the US and Indonesia.
Hence, it is likely that Grab & # 39; s IPO plans will come after the merger with Gojek is dropped. The company declined to comment on the possible IPO.
The market is good and business is better than before. This should work well for public markets.
Sources familiar with the Grab IPO in a Reuters report
Selected image source: ucars.sg