According to foreign media reports, people familiar with the matter disclosed that Alibaba Group is negotiating to invest US$3 billion in Southeast Asian ride-hailing giant Grab.
It is reported that Alibaba Group will use part of the funds to acquire part of Grab shares held by Uber Technology. This transaction may be Alibaba’s largest investment in Southeast Asia since it first invested in Lazada in 2016. Alibaba’s previous layout in the field of ride-hailing was limited, but the potential cooperation with Grab allowed it to obtain data from millions of users in eight countries, access the growing distribution team, and acquire shares in digital wallets and financial services.
Alibaba’s investment will account for one-fifth of Grab’s recent $14 billion valuation. Currently, the company is facing the impact of the new crown virus pandemic, and there are more and more doubts about the company. Grab CEO Anthony Tan said that the company is facing its biggest crisis, and co-founder Tan Hooi Ling warned in May that “the winter will be long.” The company’s existing investors are also disappointed by the competition between Grab and Gojek.
The world’s largest online ride-hailing companies have been in costly competition on each other’s sites for many years before agreeing not to enter each other’s core markets. The truce allowed Uber to acquire more than $9 billion worth of shares in its competitors, including a 23.2% stake in Grab at the end of 2018. According to the terms of Uber’s agreement to withdraw from the Southeast Asian market, if the San Francisco-based company does not go public before mid-2023, Grab will face the possibility of being acquired by Uber.
SoftBank Group is an investor in major online car-hailing companies in the world. According to people familiar with the matter, the group used its position as a major shareholder to push Uber to reduce its holdings in Grab, Didi Chuxing and Yandex in Russia. Uber said in April this year that due to the pandemic severely affecting the online car-hailing industry, it will write down about US$2 billion in investment.
In addition, the SoftBank Group is still pushing Grab to make peace with Gojek. According to people familiar with the matter, although speculation about a possible merger has resurfaced, the two companies are far from reaching an agreement. The hostile relationship between the two parties and the complexity of coordination among many investors hindered negotiations.
Other people familiar with the matter said that JPMorgan Chase and Goldman Sachs acted as advisers to Grab and Gojek, respectively. One plan that has been discussed in the past is that it may only merge the two companies’ online car-hailing businesses in Indonesia. Grab and Gojek, both valued at more than US$10 billion, are rivals, and they are ambitious to create a super application that integrates all functions. The two companies also compete in food delivery and financial services.
Indonesia is the largest market and the most promising market in Southeast Asia. People familiar with the matter said that in any possible merger, Indonesia is still the key sticking point, and both companies hope to obtain a majority stake in the combined company in Indonesia. According to another person familiar with the matter, Gojek, regarded as the Indonesian online car-hailing champion, will not be squeezed into the deal. The company’s app has the highest number of downloads in Indonesia and has denied rumors of mergers and acquisitions in the past.