Grab CEO confident Spac merger to close by year-end after delay

Grab CEO Anthony Tan did not rule out a secondary listing in Singapore, saying the company considers all options.
Grab CEO Anthony Tan did not rule out a secondary listing in Singapore, saying the company considers all options.PHOTO: REUTERS

SINGAPORE (BLOOMBERG) - Grab Holdings chief executive Anthony Tan said he is confident the merger of the ride-hailing and food-delivery giant and a United States blank cheque company will be completed by year-end, following a delay caused by a review of its financials.

The Singapore-based start-up 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 (Spac) - 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 that its completion target was next month.

"We decided to be proactive," Mr 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 South-east Asia, is the latest company to be affected by intensifying scrutiny from US financial regulators on deals involving Spacs. After a frenzy of listings, the Spac market has been hit by a crackdown by the US Securities and Exchange Commission (SEC) 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 cheque 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.

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

He did not rule out a secondary listing in Grab's home market of Singapore, saying that 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 (S$53 billion).

The CEO said Grab considered a traditional initial public offering, but opted for a deal with Mr 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. Bloomberg Intelligence analyst Matthew Kanterman calculates that Grab's enterprise value-to-sales ratio is more than double those of ride-sharing peers Uber Technologies and Lyft, "giving it scant wiggle room for missteps".

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

"We are excited that Grab is an early one to represent South-east Asia on a global stage," he said.