Singapore’s Grab raised $1 billion from financial investors on top of the $1 billion it secured from Toyota Motor Corp., as Southeast Asia’s leading ride-hailing startup expands its geographic reach and moves into services like food delivery and payments.
The startup, founded by Anthony Tan and Tan Hooi Ling, increased its financing round to $2 billion with money from Ping An Capital and Lightspeed Venture Partners as it wages a costly battle against Indonesia’s Go-Jek. The Jakarta-based rival is expanding outside its home turf and has announced it would invest $500 million to enter Singapore, Thailand, Vietnam and the Philippines.
Six-year-old Grab bought out Uber Technologies Inc. in Southeast Asia earlier this year and is racing to consolidate its grip on the region. It’s expanded into services like payments to create a mobile platform that can address everyday requests for millions of users. Grab handles more than 7 million drivers, agents and merchants scattered across 225 cities in eight countries, and its app has been downloaded on more than 100 million mobile devices.
“A significant portion of the capital that we’ve raised will go towards Indonesia, which is our largest market,” President Ming Maa said in an interview. “It’s a sizable market and our investors want us to continue investing.”
Maa said business is increasing sharply with growing demand.
“We are on track to hit $1 billion revenue” in 2018, he said. “We are the first company in this region to hit $1 billion revenue within the technology startup space.”
Still, Maa said the company hasn’t begun to home in on a date for an initial public offering, despite peers like Uber making such plans.
“An IPO is not a short-term objective right now or something that we obsess over,” he said. “We will certainly go public at some point in the future. Short-term, what we are focused on is just out-serving our customers.”
Grab’s existing shareholders include Japan’s SoftBank Group Corp., China’s Didi Chuxing and Uber. That major investors from around the globe are backing Grab now may be a signal of growing interest in the region.
“These institutional investors are literally aggregating capital from around the world purely looking for financial returns, so for them to divert money into this part of the world, it’s a big signal,” said Kuo-Yi Lim, managing partner at Monk’s Hill Ventures in Singapore. “It’s a conviction on Grab and for Southeast Asia’s tech ecosystem.”
Toyota’s June investment in Grab marked the largest ever bet by an automaker on the ride-hailing business. The deal was double the size of General Motors Co.’s investment in Lyft Inc. in 2016, highlighting Chief Executive Officer Akio Toyoda’s determination to expand into mobility services. Grab was valued at just over $10 billion in the transaction, a person familiar with the matter said at the time.
Go-Jek’s backers, which include Chinese internet giant Tencent Holdings Ltd. and Warburg Pincus, have offered at least $1 billion of new funding to accelerate its overseas expansion, people with knowledge of the matter said in June. Go-Jek is also broadening its range of services, acquiring three local financial-technology companies in December as it moves into digital payments.
“We love competition,” said Maa. “We have out-competed much bigger companies than Go-Jek — this is part of the course.”