Grab raises additional S$1.36 billion to finance ride-hailing battle

SINGAPORE — Grab has secured new investment of US$1 billion (S$1.36 billion) from a clutch of financial firms, as Southeast Asia’s leading ride-hailing startup expands its geographic reach and moves into services like food delivery and payments.

The latest injection of funds, announced by Grab on Thursday (Aug 2), comes after Toyota Motor in June bought a US$1 billion stake in Grab as the lead investor in a financing round launched following Grab's acquisition of rival ride-hailing company Uber's operations in South-east Asia.

Grab said its new investors include global asset manager OppenheimerFunds, China's Ping An Capital, Microsoft co-founder Paul Allen's Vulcan Capital, Macquarie Capital and Lightspeed Venture Partners.

Six-year-old Grab, which counts Chinese ride-hailing firm Didi Chuxing and Japan's SoftBank Group Corp among its backers, was valued at just more than US$10 billion after Toyota's investment, a source familiar with the matter said at the time.

The Singapore-based startup said it would use the new funds to expand its online-to-offline services in South-east Asia, particularly in Indonesia, where rival Go-Jek is the dominant player in ride-hailing.

“It’s a sizable market and our investors want us to continue investing," Grab's president Ming Maa told Bloomberg in an interview.

He said business is increasing sharply with growing demand, adding: "We are on track to hit US$1 billion revenue (in 2018). We are the first company in this region to hit US$1 billion revenue within the technology startup space.”

Still, Mr Maa said the company hasn’t begun to home in on a date for an initial public offering, despite peers like Uber making such plans.

“An IPO is not a short-term objective right now or something that we obsess over,” he added. “We will certainly go public at some point in the future. Short-term, what we are focused on is just out-serving our customers.”

Grab, which started as a taxi-booking app, has been transforming itself into a consumer technology group, offering services such as digital payments and food delivery.

That major investors from around the globe are backing Grab now may be a signal of growing interest in the region, analysts said.

“These institutional investors are literally aggregating capital from around the world purely looking for financial returns, so for them to divert money into this part of the world, it’s a big signal,” said Mr Lim Kuo-Yi , managing partner at Monk’s Hill Ventures in Singapore.

“It’s a conviction on Grab and for Southeast Asia’s tech ecosystem.”

Go-Jek’s backers, which include Chinese internet giant Tencent and Warburg Pincus, have offered at least US$1 billion of new funding to accelerate its overseas expansion, people with knowledge of the matter said in June.

Go-Jek is also broadening its range of services, acquiring three local financial-technology companies in December as it moves into digital payments.

“We love competition,” said Mr Maa of Grab. “We have out-competed much bigger companies than Go-Jek - this is part of the course.” AGENCIES