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Alibaba, Grab in Talks for a $3 Billion Investment

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Key Points

  • The Chinese eCommerce behemoth, Alibaba, is in discussions to invest $3 billion into Grab, one of Southeast Asia’s ride-hailing giants.
  • According to people close to the matter, part of the investment will be allocated to buy back some of Grab’s shares from Uber.
  • This potential investment deal will enable Alibaba to access millions of consumer data in eight countries where Grab operates.
  • Visit The Financial Today’s homepage for more stories.

The Chinese eCommerce behemoth, Alibaba, is in discussions to invest $3 billion into Grab, one of Southeast Asia’s ride-hailing giants, Bloomberg reported on Monday. According to people close to the matter, part of the investment will be allocated to buy back some of Grab’s shares from Uber.

When Uber left Southeast Asia in 2018, they acquired a 23.2% stake in Grab as part of the exit deal. Under the terms of the said agreement, Grab faces a $2 billion payout to Uber if the Singapore-based ride-hailing company won’t go public by March 2023.

This potential investment deal will enable Alibaba to access millions of consumer data in eight countries where Grab operates. Although the Chinese giant had limited investments in the ride-hailing sector, the potential tie-up with Grab may represent one of its most significant ventures in Southeast Asia after its investment in Lazada in 2016.

Grab’s CEO, Anthony Tan, said that the company is facing its “single biggest crisis,” as the ride-hailing company endures tough times amid the coronavirus pandemic impacting most of its operations. The company’s investors have also been frustrated by the “value-destroying” competition from its regional arch-rival Gojek.

Softbank, an investor in Grab and other large ride-hailing companies worldwide, encourages the Singaporean company to resume its talk with Gojek for a potential merger. The previous negotiations were impeded by a hostile relationship between the two giant companies and the complexity of coordinating many of their investors.

One of the most critical merger discussions is about which company will take the most stake in Indonesia’s merged business—Southeast Asia’s largest market. Although Gojek is seen as Indonesia’s champion and was the most widely used on-demand mobile app by Indonesians in 2019, according to App Annie, Grab is still ahead of Gojek in Indonesia.

Both companies were hit by the coronavirus pandemic and the resulted lockdowns in the region. Despite all this, Gojek managed to receive fresh capital from Facebook Inc. and PayPal Holding Inc., hinting strong confidence in the company’s venture in the digital payments space in the region.

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