Grab retains the full backing of SoftBank as the ride-hailing firm goes bumper-to-bumper with Indonesian rival Gojek for right-of-way on Southeast Asia’s roads, Anthony Tan, the company's co-founder and chief executive, said on Monday.
And that support could come in various guises including more capital and operational support from SoftBank’s other portfolio companies.
“I met Masayoshi-san last week where he gave his unlimited support to power our growth,” Tan said in a statement, referencing Softbank's influential founder and CEO, Masayoshi Son.
Softbank's Saudi-backed $100 billion Vision Fund has already invested about $70 billion in tech startups globally and it is in talks with investors about raising a second fund in its quest for digital dominance.
“Winner takes all,” Son said at the Milken Institute Japan Symposium on March 25. “In probability, [the chance of] No. 2 company succeeding is very low.”
Son added that his investments in Uber, Didi, India's Ola and Grab add up to a 90% market share of the worldwide ride-share industry. “Our group of companies are all number one company in each geography of the world," Son said, underscoring his combative optimism.
SoftBank’s support of Grab dates back to 2014, when it was still fighting off Uber in Singapore.
Singapore-headquartered Grab is making a bid to dominate ride-hailing across Southeast Asia.
Grab said on Monday that it plans to raise $6.5 billion by the end of December to support its expansion. This figure includes the $4.5 billion raised so far in Grab's current “series H” round of fundraising. Last month, Grab said it had secured a $1.46 billion investment from the SoftBank Vision Fund as part of the “H” round.
The additional capital will be in the form of debt and new equity raised. Part of that extra $2 billion will come from SoftBank, a person familiar with the matter told FinanceAsia.
Grab raised over $700 million in debt in October 2017 from banks including HSBC, ring-fenced to finance the growth of Grab’s Singapore vehicle fleet. The person said the loans this time around could come from a different mix of banks.
As of March, Grab had managed to raise about $8.8 billion from investors to pursue its monopolistic ambitions, more than double Gojek’s $3.1 billion, according to database Crunchbase. Both have high-profile, determined backers with deep pockets. Grab’s biggest shareholders other than SoftBank are Uber and China’s Didi Chuxing. Gojek’s major shareholders include US search giant Google, China’s JD.com and Tencent.
Grab and Gojek are not only competing in ride-hailing but also other services by drivers, such as filling orders placed on smartphones for services ranging from food delivery and top-up payments.
“The support from strategic investors like SoftBank and others will allow us to grow very aggressively this year across our verticals of payments, transport and food,” Tan said.
INDONESIAN BATTLEGROUND
The largest economy in Southeast Asia, Indonesia, is a key battleground.
“Indonesia, in particular, will see us invest a significant portion of fresh proceeds, where we are on track to be four times larger than our nearest competitor and remain the leader in on-demand transport,” said Ming Maa, Grab’s president.
Grab did not specify on which measure it would be bigger. Investors have long struggled with the differing metric definitions used by private technology companies to measure growth – including gross transaction value (GTV), which purports to be a multiple of the number of items sold by the sale price, booking value or transaction value.
Grab added on Monday that it plans to make at least six investments or acquisitions in Southeast Asia this year. To this end, the person familiar with the matter said Grab is already in talks with some of these target companies, the bulk of them in Indonesia.
Both Gojek and Grab are already claiming leadership in terms of the number of bikes and cars on the streets of Indonesia. Grab backed up this claim on Monday saying it has 62% of Indonesia’s ride-hailing market, according to market analysts ABI Research.
Grab added that its Indonesian business is expanding rapidly, with revenue more than doubling in 2018. GrabFood is growing rapidly in Indonesia, operating in 178 Indonesian cities from 13 at the start of last year, with delivery volumes growing almost 10 times in 2018.
Grab upped the ante in Indonesia back in February 2015 when it signalled that it would invest $700 million over the following four years for acquisitions as well as a research centre in Jakarta, adding to the cash it is already burning to build up its operations in the country.
