Grab and Traveloka set to go public in coming months

Grab Holdings and Traveloka are poised to become public companies in the coming months, kick-starting a coming-out party for South-east Asia's long-overlooked Internet scene.

Grab will this week unveil a listing via a US blank-cheque company that has drawn backers ranging from asset management firm T. Rowe Price to investment firm Temasek and values the Singapore ride-hailing giant at over US$34 billion (S$45.6 billion), people familiar with the matter said, in the largest-ever deal of its kind.

Indonesian online travel services firm Traveloka will follow suit, listing at a valuation of about US$5 billion via a special purpose acquisition company (Spac) backed by billionaires Richard Li and Peter Thiel, other people with knowledge of the matter said.

Terms on both deals could still change, the people said.

The mega deals will front a chain of initial public offerings (IPOs) featuring the region's most valuable start-ups from this year - from Grab's rival Gojek to e-commerce giant Tokopedia to Singapore's PropertyGuru.

Their debuts allow investors to bet on the industry's ascendancy in the post-Covid-19 mobile era over the financial institutions and industrial conglomerates that have long dominated South-east Asia's corporate landscape.

Over the longer term, market watchers expect fast-growth technology firms to dominate attention like they have in China and the United States, overhauling a South-east Asian roster now led by gaming and e-commerce leader Sea.

"We have seen a similar trend across other more established markets, and it's now South-east Asia's golden period," said Mr Rajive Keshup, a director at Cathay Capital, a global investment fund with US$4 billion of assets under management.

"We expect a lot more capital to flow into the region on the back of this mega announcement. And that is a very good leading indicator about the health of the region."

The tech industry in South-east Asia, home to about a 10th of the world's population and some of the fastest-growing economies such as Indonesia, is overdue for recognition. The region did not have a single major tech firm listed till Sea went public in New York in 2017.

That is despite a smartphone-using population growing at rates unmatched in much of the world, driven by economic growth and government policies that encourage investment in technology.

That potential is attracting the likes of Amazon.com and Chinese majors including Tencent Holdings and Alibaba Group Holding, which see South-east Asia's increasingly affluent consumers as key to their global ambitions.

External factors are also at play. Money has flown out of China's biggest Internet names since Beijing launched a campaign to curtail Alibaba and its peers late last year. At the same time, after the worst tech sell-off in half a year, there are concerns that a bubble is forming.

More immediately, however, investors are gambling on the region's take-off. South-east Asia's Internet economy cooled during the Covid-19 pandemic but spending online should bounce back rapidly and treble to over US$300 billion by 2025, research from Google, Temasek and Bain & Co shows.

"As some of these companies begin to list, it could be quite transformative to capital markets, which have been dominated by traditional sectors such as financials, real estate and commodities," said Mr Joshua Crabb, a senior money manager in Hong Kong at Robeco, which oversees US$186 billion.

"This has had a huge impact on the nature of the market in China over the past decade and may be just starting in Asean."

To more quickly tap investor enthusiasm, many start-ups like Grab and Traveloka which remain unprofitable are considering blank-cheque firms - but the influx of capital into Spacs is raising hackles among regulators from New York to Singapore, who worry that traditionally more lax disclosure and accountability requirements may burn investors. Listing through a Spac can be completed in weeks compared with the 12 months it would take to go public in the regular way.

In South-east Asia, the rush of IPOs is driven in part by Sea's run-up since the start of last year, which demonstrated the pent-up appetite for the region's Internet firms.

"Grab's listing provides a much-awaited exit for existing investors, meanwhile, providing exciting opportunities for US investors to invest in South-east Asia growth companies," said Mr Kerry Goh, chief investment officer at Kamet Capital Partners. "This should accelerate investors' attention and hence more listings should be expected."

BLOOMBERG