Grab's new investors hope to catch a ride on its regional growth

The latest infusion of cash values the ride-hailing app at around $11 billion. Its expanded war chest will be put to work mainly in Indonesia where rival Go-Jek is revving up investment.

Southeast Asia's Grab said it has raised another $1 billion in its ongoing round of funding from investors looking to the ride the coattails of the online-to-offline (O2O) platform's regional growth.

Grab's series H round of fund raising values the six-year-old unicorn at about $11 billion, according to a person familiar with the process.

Its valuation is rising fast, when Toyota Motor poured $1 billion into the Singapore-headquartered firm in June, Grab was worth about $10 billion and it was pegged at $6 billion when it bought Uber's regional operations in March.  

Toyota Motor has now been joined by a slate of financial institutions, including OppenheimerFunds, Ping An Capital, Mirae Asset Naver Asia Growth Fund, Cinda Sino-Rock Investment Management Company, All-Stars Investment, Paul Allen's Vulcan Capital, Lightspeed Venture Partners, Macquarie Capital and other investors, Grab said in a statement on Thursday.

“We have seen overwhelming interest from global strategic investors — and partners who are keen to partner with us to capture the region’s booming growth,” said Ming Maa, president of Grab in a statement.

New York-headquartered OppenheimerFunds' investment came from one of its emerging markets equities funds which does not usually make private investments; but it made an exception in the case of Grab in order to gain exposure to Southeast Asia, the person said.  

All-Stars Investment, whose co-founder was the Asia-Pacific head of internet and media investment research at Morgan Stanley, was also seeking to use Grab as a proxy for the region's growth. 

Their motivation is clear, in 2016, a Google-Temasek study predicted Southeast Asia's internet economy would be worth $200 billion by 2025.

Lightspeed Venture Parnters was a surprise amongst the list of investors as it is normally a very early stage investor, from seed, through to series B. However, the first outside investor in Snap's messaging app Snapchat seems to have found the late-stage investment in Grap particularly appetising.

The Silicon Valley firm had flagged it wanted to expand in Southeast Asia, and it seems to have used Grab as a way to jump-start its appearance in the region. 

This round of fund raising was notably different to others, where Grab has used investment to anchor a strategic partnership, illustrated by its ties with Toyota, Didi Chuxing and Hyundai.

This time Grab was more interested in building relationships among the institutional investment community. It is relatively common for startups to begin including prestigious investors among their shareholders as a way of burnishing their reputation prior to IPO. Ant Financial's latest fundraiser included names such as the Canadian Pension Plan Investment Board and Singapore's Temasek.

To be sure, the inclusion of China's Ping An could be potentially useful for Grab's budding payments platform, Grab Pay, which has ambitions to expand into other financial products such as insurance. 

Grab's news follows an announcement by rival Go-Jek in May that it will invest $500 million to enter Vietnam, Thailand, Singapore and the Philippines, starting with ride-hailing but ultimately expanding into other services.

Go-Jek’s latest fundraising brought in investment from Astra International, Google, JD.com, Meituan, Tencent and Temasek among others.

Grab said it would use a significant portion of the proceeds from the current fundraise to continue investing in Indonesia. Grab has over 7.1 million micro-entrepreneurs on its platform, more than half of whom reside in Indonesia.

Through Grab’s partnership with local wallet and rewards programme OVO, Grab has formed a mobile payments ecosystem, with more than 60 million downloads.

In July, Grab launched GrabFresh, an on-demand grocery delivery service in Jakarta, with other cities to follow later in the year.

GrabFood has expanded from Jakarta to serve 28 cities and towns across Indonesia, winning significant market share with Gross Merchandise Value (GMV) in Indonesia almost quadrupling in the first half of 2018.

Similarly, GrabExpress GMV in Indonesia has more than doubled in the first half of 2018.

Grab will use the funds to expand the range of O2O services it provides across Southeast Asia.

Grab users have a one-stop solution to meet their everyday needs; whether it is using the Grab app to pay merchants through GrabPay, ordering food through GrabFood, sending parcels through GrabExpress, or hailing rides with Grab’s range of transport services.

Grab is looking to expand the universe of everyday services available to its users through partnerships.

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