The most valuable Grab startup in Southeast Asia has postponed its initial public offering (IPO) of US $ 54 billion (IPO) through a merger of a special purpose acquisition company (SPAC) until the fourth quarter of this year.
The company had previously said it had the goal close the deal in July this year, but there are delays in details required by the United States Securities and Exchange Commission (SEC). Grab is finishing the financial audit from 2018 to 2020 and is working with the SEC to obtain prior authorization for accounting policies and financial disclosure.
Grab’s valuation is the highest so far in the SPAC space, and the traveling giant could raise about $ 6 billion (US $ 4.5 billion) in cash revenue.
Grab Holdings CEO Anthony Tan had said it is trust the merger with the U.S. blank check company will be completed by the end of the year.
Some observers and investors have expressed concern about the delay, such as SPAC madness it can cool down in a matter of months.
However, experts say investor appetite will not diminish and SPAC operations will continue.
Following the completion of the Grab SPAC agreement, the shares of the combined entity will be traded on the Nasdaq with the GRAB marker.
SPAC cooling time paves the way for more serious investors
Michael Lints, a partner at Golden Gate Ventures, commented: “SPAC’s fashion has definitely shrunk, but it’s not completely gone … With the mania slowing down, you’ll find more strategic, long-term investors than you they are looking for a quick victory. This will play in favor of the agreement (Grab).
An SPAC is a shell company that raises funds to acquire a private company in order to make it public, allowing these targets to avoid a traditional IPO.
Recently, the performance of SPACs has had hesitated in the market, exerting additional pressure on blank check companies trying to attract companies that are wary of the IPO process.
U.S. regulators have been warning investors for months about possible risks around SPACs. This year, they scared distributors by marketing the potential for a different accounting treatment for one aspect of SPAC operations, a move that has forced many companies to review their results.
He intensified examination comes amid a global stock market boom. The companies raised about $ 130 billion in the United States this year in June, of which $ 88.2 billion were SPAC bids, according to data from Refinitiv.
“SPACs as a vehicle are clearly here to stay. Long-term investors tend to spend more time understanding risks, but they also see value in companies like Grab, ”Michael said.
Grab’s SPAC delay will be an advantage for the tech company
Rumors about Grab’s IPO IPO had recently been downplayed by the market, analyst Ashley Huo told DailyFX.
However, he considered that the sentiment of the shares would remain almost the same as in the first quarter of 2021, when they reached a record high in just a quarter.
This is due to the food distribution segment, which grew 49 percent during the first quarter and helped offset the fall in the number of vehicles. The financial services segment increased 17% in the same period. The company did not provide revenue or profit numbers.
Experts say the delay will provide the tech company more time to work on presenting results for this year as well, to gain investor confidence.
“His effort to achieve decent growth in such a difficult period can be a compelling fact for his attractiveness in the foreseeable future … Grab made a gross value of the goods of 4.8 billion Australian dollars (3.6 billion US dollars) in the first quarter of this year, which was a growth of 5.2% compared to the first quarter of last year, ”said Ashley.
New SEA listings in the US market show growth potential
Investors will look at this deal from an opportunity perspective, Michael said, arguing that Southeast Asian technology companies are relatively new to U.S. public markets.
“Apart from Sea Group, there has been no major listing in the Southeast Asian U.S.,” Michael added.
Through Grab, public investors can understand the great opportunity the region has and how much the technology company can grow through existing and new product lines, he said.
SPACs usually have 24 months to find a target. If the company does not identify any, it is liquidated and investors recover their money.
Investors who buy and fund SPAC when they first become public are usually institutions such as hedge funds.
Despite the bleak global economic outlook and the general slowdown of 2020, the Asian Development Bank and the International Monetary Fund have projected a rebound in Southeast Asian economies for this year.
According to the Southeast Asian InfoComm platform, the region is a bright spot which will continue to shine for companies looking for new markets and growth opportunities in difficult times.
This is due to the fast-growing middle class of the region, which doubled in size in 2020 compared to 2012.
Faced with a context of growing consumption, Covid-19 has also accelerated interest in digitalization and technology in Southeast Asia, as well as the demand for digital innovations and applications.
Economic recovery is a “wildcard” in influencing investors ’appetite
United States Federal Reserve (Fed) it raised their expectations for inflation this year and said it will raise interest rates.
This has affected the stock markets because indebtedness can become expensive for individuals and companies. Higher interest rates also tend to negatively affect earnings and stock prices in most sectors.
Ashley believes hardened interest rates may not affect investor sentiment in the Grab SPAC deal.
“The Fed is expected to begin shrinking in 2022. Unless the Fed takes further steps to accelerate progress, it may not have a significant impact on the Grab SPAC agreement,” said analyst Ashley Huo of DailyFX.
However, Michael has a more cautious approach.
“Rising interest rates always affect public markets and the feelings of public investors. It’s hard to disconnect a big quote from the sentiment of public investors, ”he said.
“It is difficult to say the impact, as we still have a few months of launch at the end of this year. Quotes may reconsider the valuation if the market is more prudent and conservative due to rising interest rates. ‘interest’.
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