Following the news that Singapore-based ride-hailing giant Grab will merge with a special purpose acquisition company (SPAC) to go public at a valuation of $40.5bn;

Swati Verma, Principal Analyst of Thematic Research at GlobalData, offers her view:

“GlobalData expects the deal to bring a renewed focus on the SPAC route of IPOs, after signs that SPAC activity was on the wane. Grab, the fourth largest e-commerce unicorn with a current valuation of over $14bn, has emerged as a superapp. Apart from ride-hailing, it has successfully ventured into offerings like digital payments, online food delivery, hotel booking, and insurance services. In addition, it has expanded into eight countries in Southeast Asia. It came out of the pandemic in a good shape, and reported that its net revenue jumped by about 70% year-on-year in 2020, with revenues recovering strongly to above pre-pandemic levels.

“The alternate way of listing—reverse merger with a SPAC, has been gaining popularity among tech, media, and telecom (TMT) companies. In 2020, GlobalData saw DraftKings (gaming), Opendoor (e-commerce), Quantumscape (batteries for electric vehicles), and Nikola (electric vehicle) opting this route. In 2021, Arrival (electric vehicle), Paysafe (fintech), and SoFi (fintech) were the big ones to select this route. The SPAC merger IPOs are cheaper and faster alternatives to traditional IPOs because they are less intrusive with fewer disclosure requirements.

“Despite the growing popularity, the SPAC mergers continue to be considered as a controversial method listing—with questions  among both investors and regulators. Grab is set to record the biggest SPAC-based IPO, reminding other TMT companies that this can be an effective route to a listing. As a result, GlobalData expects even more TMT companies opting for this route.”