Grab CEO confident SPAC deal to close by year-end after delay

·3-min read
Grab CEO Anthony Tan speaks during an interview at his home in Singapore August 12, 2020. Picture taken August 12, 2020. REUTERS/Joseph Campbell
Grab CEO Anthony Tan (PHOTO: REUTERS/Joseph Campbell)

By Yoolim Lee and Juliette Saly

(Bloomberg) — Grab Holdings Inc. Chief Executive Officer Anthony Tan said he’s confident the merger of the ride-hailing and food-delivery giant and a U.S. blank-cheque company will be completed by year-end, following a delay caused by a review of its financials.

The Singapore-based startup last week postponed the expected completion of the deal with Altimeter Growth Corp. — set to be one of the largest-ever mergers with a special purpose acquisition company — to the fourth quarter as it works on an audit of the past three years. When announcing the pact in April, Grab said in an investor presentation its completion target was July.

“We decided to be proactive,” Tan said in an interview with Bloomberg Television. “We wanted to set the bar in transparent financial reporting. It may have taken a little longer than we expected.”

Grab, which operates across Southeast Asia, is the latest company to be affected by intensifying scrutiny from U.S. financial regulators on deals involving SPACs. After a frenzy of listings, the SPAC market has been hit by a crackdown by the U.S. Securities and Exchange Commission as well as lawsuits from shareholders, falling stock prices and delays in planned listings.

The SEC’s scrutiny on how accounting rules apply to a key element of blank-check companies has prompted restatement filings. The regulator has said that SPACs may need to account for warrants — securities issued to early investors — as liabilities, rather than as equity.

Tan, 39, declined to comment when asked if he expects any major restatements by Grab following the financial audit.

Tan said the company captures 40 terabytes of data daily through its "superapp," which has been downloaded 155 million times by customers who use it to call a ride, order lunch and pay for purchases.

He didn’t rule out a secondary listing in Grab’s home market of Singapore, saying the company considers all options. But he said Grab is “laser-focused” on the Nasdaq listing via the Altimeter merger that values the combination at about US$40 billion.

The CEO said Grab considered a traditional initial public offering, but opted for a deal with Brad Gerstner’s Altimeter after seeing the commitment by the SPAC partner. Altimeter has committed to a three-year lock-up period.

“They put their money where their mouth is,” he said.

Some analysts have questioned Grab’s targeted valuation. Matthew Kanterman, an analyst with Bloomberg Intelligence, calculates that Grab’s enterprise value-to-sales ratio is more than double those of ride-sharing peers Uber Technologies Inc. and Lyft Inc., “giving it scant wiggle room for missteps.”

When asked if the US$40 billion valuation may be too stretched, Tan declined to give a direct answer.

“We are just excited about the region,” a large market for digital services, he said. “We are excited that Grab is an early one to represent Southeast Asia on a global stage.”

© 2021 Bloomberg L.P.

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