Grab is going to IPO soon. In this video, I’ll explain everything you need to know, how is Grab going to IPO. I’ll show you Grab financials, and share with you whether I’ll be investing in Grab or not. Enjoy.
0:00 – Intro
0:40 – How is Grab going to IPO
Grab will IPO through a SPAC merger with Altimeter Growth Group Corp. SPAC is just a listed company with no commercial operations. It is formed to raise capital through IPO for the purpose of acquiring an existing company. With SPAC, a company will have lesser work to be listed. A typical SPAC merger would be just 4-5 months, which means Grab would go public by September 2021.
3:29 – Why IPO through SPAC
According to Grab, they wanted to IPO through SPAC is to partner with leaders who can guide grab and help them clearly see the path. The other reason was because of their deal with Uber, stating they have to IPO by 2023. Some people were speculating that the reason Grab wanted to IPO quickly was because they wanted to avoid paying Uber that $2 billion dollars.
4:25 – Grab financials review
Grab is focusing in South East Asia, they are still in the early innings, meaning they have a lot of room to grow. But I feel if they don’t expand to other places, they will hit a plateau after a while.
Their deliveries performed really well during the pandemic in 2020. But the growth slowed down after everyone were allowed to eat out. Asean Post estimated that food delivery still have a lot of room to grow, especially in Indonesia.
Their mobility revenue dropped in 2020 as everyone had to stay home. According to HootSuite, ride hailing is really popular in South East Asias countries, due to lack of infrastructure and in Singapore case, due to expensive car prices.
Grab’s ride hailing was estimated to have a growth rate of 20%. But there’s only so fast you can grow before slowing down.
Grab is popular in Singapore, partly due to Uber leaving South East Asia. But outside of Singapore, Grab has a lot of competition. In the future, Grab will be disrupted by robotaxis.
Grab has alot of financial services. But they are just a small part compared to their other businesses. Their partnership with Singtel to create a digital bank will boost their revenue.
Up till now, Grab net income is still negative. They are estimated to be profitable in 2023. The reason they were losing money is because they are heavily reinvesting in themselves, which will pay off in the future.
10:57 – Would I invest in Grab?
I won’t be investing in Grab because of a few reasons. They have a ton of competition and I prefer to invest in companies that have a strong moat to give them unfair advantage.
Second reason is I feel they have limited growth if they focus only in South East Asia.
Third, SPAC were found to do poorly after IPO.