Alibaba Group Holding Ltd. is reportedly in the process of investing $3 billion in Southeast Asian ride-sharing company Grab Holdings Inc., according to people familiar with the matter.
The Chinese multinational technology company, which is the primary investor in the funding round, is reported to spend a portion of the funds to acquire some of the Grab stock owned by Uber Technologies Inc., said by a reliable informant interviewed by Bloomberg. The deal would be one of Alibaba’s most significant investments in Southeast Asia since its first investment with Lazada in 2016.
Grab refused to provide a statement, while Uber and Alibaba were not immediately available when asked for a comment.
Grab, a multinational company based in Singapore, is Southeast Asia’s largest ride-hailing services provider. It also renders deliveries of packages, food, grocery, scooter rentals, and cashless payments.
The ride-hailing company operates in Japan, Singapore, Vietnam, Cambodia, and four other Southeast Asian countries. In 2017, Grab had 95% of the ride-sharing market.
In 2016, Alibaba got a controlling interest in the Singapore based e-commerce company Lazada but had been losing share to Shopee, which was then backed by Chinese conglomerate Tencent. Analysts suggest that Alibaba can use Grab’s services to acquire back more of the market.
Alibaba previously had limited forays in ride-hailing services, but this potential partnership with Grab gives the Chinese company access to data of millions of users in around eight countries. It would serve as a growing delivery fleet and stake in the digital wallet and financial services. One of the proposed plans is to integrate Grab’s delivery network into the e-commerce company Lazada, providing the Singaporean startup access to a broader consumer network.
Uber, which returned its operations in Southeast Asia to Grab in 2018, took a 27.5% stake in Grab’s business. In April, Uber said they are expecting an impairment charge of around $2.2 billion, wherein the cost would be against the carrying value of Uber’s minority equity investment due to the impact of the pandemic.
Grab has an estimated valuation of $14 billion. Moreover, it has SoftBank Group Corporation as one of its backers. It has expanded into food deliveries, financial services, and mobile payments over the last few years, even before the coronavirus pandemic has affected their mainstay ride-hailing services. In June, Grab said that it had cut costs amid slower growth by a 5% reduction in staff members.
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