Aradhana Arauvindan and Anshuman Daga

SINGAPORE (Reuters), Grab, Southeast Asia’s largest ride-hailing firm and delivery company, will make its market debut Thursday following a $40 billion merger with a Special Purpose Acquisition Company (SPAC). This is a landmark listing that sets the standard for future regional offerings.

This is the culmination of nine years worth of work by the Singapore-based company. It started as a ride-hailing service and operates in 465 cities across eight countries. They also offer food delivery, payment and insurance products.

The biggest U.S. listing by a Southeast Asian company follows Grab’s April agreement to merge https://www.reuters.com/article/us-grab-m-a-altimeter-growth-idCAKBN2C00H6 with U.S. tech investor Altimeter Capital Management’s SPAC, Altimeter Growth Corp and raise $4.5 billion, including $750 million from Altimeter.

Analysts believe there are many opportunities in Southeast Asia’s financial service and food delivery market, which is a fragmented region with 650 million inhabitants. But, it could take a while to become profitable.

Grab’s flotation “will provide a bigger cash buffer” to its “cash burn”, S&P Global (NYSE:) Ratings said in a note. However, Grab’s credit quality is still constrained by losses and the free cash flow could prove to be negative in the coming 12 months.

Southeast Asia’s internet economy is forecast to double to $360 billion in gross merchandise value by 2025, prompting Grab’s rivals, including regional internet firm Sea https://www.reuters.com/technology/sea-ltd-raises-about-6-billion-mega-fund-raising-2021-09-10 Ltd and Indonesia’s GoTo https://www.reuters.com/technology/indonesian-tech-firm-goto-raises-over-13-bln-first-close-pre-ipo-funding-2021-11-11 Group, to bulk up.

Sources tell Reuters that GoTo is planning an IPO local in 2022, after completing a $2 billion private funding. An American listing will follow the Jakarta offer.

Altimeter Capital Partner Chris Conforti stated, “Longer term we’re really excited for Grab Financial Group,” which is a subsidiary of the company. I believe the bell curve is much larger in terms of the possible outcome, but it could still be extremely high.”

BONANZA for BACKERS

Anthony Tan (its chief executive) and Tan Hooi Ling (the founder of Grab), founded the company. They had an idea to create Grab as part of a Harvard Business School Venture Competition in 2011. They are not related.

After launching Grab as a taxi app for Malaysians in 2012, Tan (39), expanded Grab to a regional business with many services. After launching Grab as a taxi app in Malaysia, 2012, Tan (39) expanded Grab into a regional operation with dozens of services. Later it relocated its headquarters to Singapore.

Tan said in an interview with Reuters that Tan has shown the world that technology can be developed in-house and can compete internationally against international companies. “We are able to compete and win.”

Along with Grab’s cofounder and president Ming Maa he will be able to vote for 60.4%, however he retains only 3.3% of Grab’s shares.

Grab and Nasdaq will host a bell-ringing at a Singapore hotel to celebrate the New York Listing. Around 250 persons are invited to the event, including Grab’s executives and Grab’s other investors.

Grab’s listing offers a cash bonus to investors such as Japan’s SoftBank or Didi Chuxing in China, who invested as far back as 2014.

They were eventually joined later by other people like Toyota Motor Corp (NYSE:) Microsoft Corp (NASDAQ) and Japanese bank MUFG. Uber (NYSE) was made a Grab shareholder after it sold its Southeast Asian operations to Grab in 2018. This followed a five year battle.

Grab reduced its adjusted net sales for September to $17 million, citing increased uncertainty regarding pandemic restraints and movement.

The third quarter revenue dropped 9% compared to the previous year. However, its adjusted loss prior to interest, taxes and depreciation (EBITDA), increased 66% and reached $212 million. GMV rose to record levels in quarter 4.

The company aims to be profitable in EBITDA terms by 2023.

JPMorgan (NYSE) Morgan Stanley (NYSE:) was the leading placement agent for fundraising. Evercore and UBS were co-placement agents.