Grab on Thursday hopes to become the king of SPACs, no matter how uneasy have been some heads to wear that crown.
Driving the news: Grab, a Singapore-based "super app" maker, today will list on the Nasdaq, via a reverse merger with a SPAC formed by Altimeter Capital. It gives Grab a pro forma equity value of $39.6 billion, the richest price ever afforded in such a transaction.
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Grab, which launched in 2011 as a ride-hail service before expanding into everything from delivery to investing, raised over $11 billion of private funding, including at a $15 billion valuation in late 2020.
It's also raised dedicated capital for its financial services arm, but Grab president Ming Maa downplayed the possibility of a carveout, during a conversation earlier this morning.
Big picture: Many big SPACs mergers have struggled in 2021.
Grab holds the top spot just ahead of the pending acquisition of MSP Recovery by Lionheart Acquisition Corporation II, which is trading below $10 per share.
United Wholesale Mortgages, which was the largest-ever SPAC deal when first struck, is valued below its $16.1 billion merger price.
UMW supplanted MultiPlan, whose post-merger travails we recently detailed.
And then there was Bill Ackman raising the largest-ever SPAC, but then failing to buy a stake in Universal Music and getting sued.
The shining exception is Lucid, the electric car company whose market cap closed yesterday in excess of $84 billion.
The bull case is that Grab is the sort of high-growth tech company that makes public markets swoon, as evidenced by SPAC unitholder redemptions of just 0.02%. Plus, super-apps are super sticky in places like Southeast Asia, in part because slower mobile broadband speeds discourage people from downloading multiple apps (or running them simultaneously).
This SPAC also has key structural differences from others, in that sponsor Altimeter has locked up its shares for three years.
"We wanted to align our lockup with the length of projections the company was putting forth," explains Altimeter partner Chris Conforti. "I hope that becomes a standard in the industry, and helps dampen some of the more unscrupulous parts of SPACs, where it's about getting quick cash."
Altimeter also led the $4 billion PIPE with a $750 million commitment.
The bear case includes unprofitability, mega-SPAC track records and North American unfamiliarity with super apps. Plus, Grab is diving into a public pool roiled by Omicron.
The bottom line: The 10 largest SPAC mergers have all occurred since the beginning of 2020, so Grab may not be the record-holder for long.
