Grab’s Nasdaq debut highlights different views on the Southeast Asian startup scene

Shares in Singapore-based tech company Grab have fallen by more than 30% since it was first traded on Nasdaq on December 2, 2021.

With $ 4.5 billion in revenue and its attention-grabbing debut at Nasdaq, it received a lot of attention and marked the largest IPO in the United States by Southeast Asian companies.

The listing was in April at Altimeter Growth Corp, a special purpose acquisition company (SPAC) for Altimeter Capital Management, a high-tech investor. It took place after agreeing to a $ 40 billion merger with. SPAC transactions are also the largest of its kind.

While some saw the grab list as a milestone in the Southeast Asian tech startup scene, analysts also paid attention to potential overestimations.

Mixed view

Not all analysts were optimistic because of Grab’s deficit management. “Credit quality continues to be constrained by deficit businesses, and free operating cash flow could be negative over the next 12 months,” S & P Global Ratings warned.

Last month, Grab reported a net loss of $ 988 million in the third quarter, up from $ 621 million in the previous year.

However, before the listing, the atmosphere of Singapore, where the company is based, was increasing.

“The list of grabs is an important barometer and potential milestone for Southeast Asia’s digital economy,” said Angus Mackintosh, founder of CrossASEAN Research, in a commentary in Singapore. Channel NewsAsia..

Grab started as a ride-hailing service app and has evolved into food and grocery delivery, courier services, and digital payments. It operates in eight Southeast Asian countries.

There are about 350 million “digital consumers” in Southeast Asia, of which 60 million have begun purchasing online services for the first time since the pandemic began. According to industry reports Released jointly by Google, Temasek, Bain & Company in November.

E-commerce, food delivery, and digital financial services have been identified as major drivers of growth in the Internet economy.

Grab’s list was behind the fast-growing digital economy in the region. According to a press release in April, the decision to publish was “driven by strong financial performance in 2020 despite COVID-19.” In particular, the company’s total sales in 2020 exceeded pre-pandemic levels.

Grab competitors in the region are also increasing.

Indonesian technology company GoTo, founded by the merger of Ride Hailing and digital payment app GoJek and local e-commerce giant Tokopedia, announced last month that it had raised more than $ 1.3 billion in pre-initial public offering funds. Google and Tencent in China are one of its supporters.

However, one analyst warned of the “irrational” reputation of Southeast Asian start-ups amid growing investor interest in Southeast Asia.

According to Justin Hall, a partner at Golden Gate Ventures, crackdowns on Chinese big tech companies and inflows of funds from the United States and elsewhere have led to a surge in capital inflows competing for some attractive deals in the region. I am contributing.

Despite the volatile start, it is still unclear how Grab’s stock will work in the long run.

Reuters contributed to this report..

Cindy Riu