Grab aims to channel $2.5 bn in funding into payment services

The company is out to secure US$2.5 billion (Bt83.6 billion), in what will be the largest single financing in the history of Southeast Asia for a start-up.
China’s largest ride-hailing company, Didi Chuxing, and Japan’s SoftBank Group Corp, both existing investors in Grab, will pay US$2 billion to lead the current round of funding. “We are already a clear leader in online transportation in Southeast Asia with a 71 per cent overall market share. We want to grow that further,” said Grab group chief executive officer and co-founder Anthony Tan.
SoftBank is Japan’s biggest Internet company that has a tech fund of more than US$100 billion that it has invested in other ride-hailing companies, including Didi and Brazil’s ride-hailing app provider, 99.
“We have a long-time partnership with Didi, as we share the same commitment and leverage on each other’s technologies,” said Tan.
“With the support of investors, Grab will achieve an unassailable market lead in ridesharing, and build on this to make GrabPay the payment solution of choice for Southeast Asia.”
He added that Grab was still looking to new and existing investors for the remaining US$500 million. The new round of funding is expected to be used to grow its payments platform, GrabPay, given the rise in demand for mobile payment methods.
Grab bought Indonesian payment service Kudo this year, and many analysts believe it will transform GrabPay into a consumer technology firm offering loans, electronic money transfer and money-market funds.
“We are always on the lookout for strategic investment opportunities in regional companies which have great technology and who share our vision to move Southeast Asia forward. We want to invest in developing and expanding GrabPay to become the mobile platform of choice,” he said.
Grab needs the funding to strengthen to capitalise on the rising demand for ride-hailing services and also mobile payments.
This comes on the back of competition from the world’s largest ride-hailing app provider, Uber Technologies. After facing a flurry of issues in global markets including Russia, China and the United States, Uber has turned its focus to Southeast Asia and India. Uber recently began advertising its services in a bid to win confidence and market share.
Grab is now headquartered in Singapore. Anthony Tan is group CEO of Grab and co-founder, and his partner is Tan Hooi Ling. Both were studying in Harvard when they decided to start Grab about five years ago.
Anthony’s grandfather, Tan Sri Tan Yuet Foh, and his grand uncle Tan Sri Tan Kim Hor co-founded the Tan Chong group. His father, Datuk Tan Heng Chew, is the president of Tan Chong Consolidated.
Grab operates private car, motorcycle, taxi and carpooling services across seven countries in the region, with 1.1 million drivers. It recently entered the Myanmar market and has operations in Thailand, Malaysia, Singapore, Indonesia, the Philippines and Vietnam.
With this latest round of funding, Grab’s estimated valued is US$6 billion. Grab has raised US$1.5 billion since it started. Its previous investors include sovereign wealth fund China Investment Corp, hedge fund Coatue Management LLC, venture capital firm GGV Capital and Vertex Venture Holdings – a subsidiary of Singapore state investor Temasek Holdings.
It has six technology hubs, one each in Seattle, Beijing, Singapore, Ho Chi Minh City, Bangalore and Indonesia.
Apart from Uber, Grab faces challenges from local taxis in most of its markets, and in both Thailand and Indonesia, it is also up against Go-Jek, a motorbike taxi service. China’s Tencent Holdings Lte is said to have invested over US$100 million in Go-Jek.