Nab $ 2 Billion Term Loan Due To Strong US Demand
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Grab, Southeast Asia’s largest startup, has amassed $ 5 billion in cash reserves after increasing the size of its first term loan facility, underscoring pent-up international demand for growing unicorns fast in the area.
The Singapore-based company, which provides services such as transportation, food delivery, payments and insurance on its app, increased its term loan from $ 750 million to $ 2 billion following commitments to ‘investors, more than half of whom were US-based institutions, including BlackRock, Carlyle, Eaton Vance and Anchorage.
Grab is one of many companies profiting from falling interest rates and exploiting debt markets during the coronavirus pandemic. But the scale of investor interest has prompted its executives to consider an initial U.S. public offering this year, according to two people with direct knowledge of the talks.
An IPO of the SoftBank-backed company, which is valued at more than $ 16 billion, would be closely watched as a critical test of the ability to Southeast Asian technology groups publish. Very few companies in the region, which has one of the world’s fastest growing mobile internet populations, have registered in public markets.
Those who registered abroad were empowered by their access to a regional consumer market of over 655 million people.
One of the most prominent examples is Sea Group, backed by Tencent, which operates games company Garena and e-commerce platform Shopee. New York-listed shares of Sea’s rose 395% in 2020, making it one of the best performers of the year. In December, Sea increased the size of its secondary equity offering to raise nearly $ 3 billion in response to sustained investor interest.
In terms of Internet growth, Southeast Asia is “at a frontier stage,” said Kenny Liew, technology analyst at data and research group Fitch Solutions.
“Southeast Asian-focused companies such as Sea Group and Grab are in the spotlight after a decade of investor interest in US and Chinese technology players,” Liew said. “There is a lot of untapped potential in the market. ”
Other companies that hope to capitalize on this demand are launching their own IPO plans.
Grab’s main rival, Indonesia-based Gojek, could test the market later this year. Gojek is in advanced merger talks with Tokopedia, another local e-commerce unicorn, to create Indonesia’s largest tech conglomerate. The pair intend to list the combined entity this year if the talks are successful.
Grab and Gojek have already had discussions about a merger, but these talks took a break.
Anthony Tan, managing director of Grab, said the expanded term loan illustrates investors’ belief in the value of Grab “super app” platform.
The loan proceeds will be used by the company cash reserves to over $ 5 billion, enough to cover operating costs for at least three years. Moody’s and S&P Global Ratings assigned Grab ratings of B3 and B minus, respectively, with a stable outlook.