Grab Plans $1.25 Billion Fund Raise; To Spend on Buybacks, M&As
The Southeast Asian ride-hailing and delivery company will use the funds to boost the “strategic flexibility” of its business, which may include potential acquisitions
Key Points
- Grab plans to raise $1.25B via convertible bonds for buybacks and acquisitions.
- The funds will boost Grab’s strategic flexibility, including potential acquisitions, while maintaining a high deal standard.
- Grab denies merger talks with Gojek, emphasizing organic growth and prudent capital allocation.
Grab plans to raise $1.25 billion via convertible bonds to fund buybacks and acquisitions, it said after issuing a fresh denial about a potential merger with Indonesian rival GoTo Gojek Tokopedia.
The Southeast Asian ride-hailing and delivery company said it will use proceeds from the offering of convertible notes, due in 2030, to boost the “strategic flexibility” of it business, which may include potential acquisitions. It emphasized that it will continue to maintain a high bar for any deals.
Singapore-based Grab, which also provides financial services on its super app, will also use the funds to buy back shares under its previously announced $500 million buyback program. It has repurchased $226 million worth of shares to date.
The plans come shortly after the Nasdaq-listed company said in a stock exchange filing that it is not engaged in merger talks with Gojek. Grab has repeatedly denied media reports saying that it is in discussions with the Indonesian ride-hailing and delivery firm to combine their businesses in a multibillion merger.
The filing suggests that the companies either failed to reach an agreement or have decided not to pursue or continue discussions for now, Citi Research analysts said.
Grab has reiterated that organic growth remains a priority, Citi said in a note, suggesting that it will be prudent in capital allocation and will only consider inorganic opportunities like M&A when it makes sense to shareholders and aligns with business prospects.
The company’s business momentum remains strong and Citi expects it to deliver solid organic business growth and better margins ahead.
In a separate release, Grab said its business in Indonesia has continued to benefit from solid demand and ride volumes in April and May, which it attributed to its focus on affordability and expansion in the country.