Grab Holdings, Southeast Asia's most valuable technology unicorn, jumped 18.6 per cent to US$13.06 in early trading on Thursday after its debut on the Nasdaq Stock Market.

The Singapore super app, which provides everything from ride-hailing and food delivery to digital payments and financial services, agreed to merge with a US-listed special purpose acquisition company (SPAC) in April in a deal that valued it at US$39.6 billion. The merger, with an investment vehicle backed by Silicon Valley's Altimeter Capital Management, was approved at an extraordinary general meeting on Tuesday.

The transaction raised US$4.5 billion, which is the biggest US listing ever by a Southeast Asian technology company and the largest transaction by a blank-cheque company to date.

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"We will use the funds raised to expand our business in a disciplined manner. We will focus on three major areas, including our delivery businesses, financial services and e-commerce platforms," Ming Maa, Grab's president, said in an interview before its trading debut.

Ming Maa, Grab's president, says the funds raised will be used to expand its business in a 'disciplined manner'. Photo: SCMP. alt=Ming Maa, Grab's president, says the funds raised will be used to expand its business in a 'disciplined manner'. Photo: SCMP. >

While the company's operations are in Southeast Asia, it opted to list on the Nasdaq to tap a deep and liquid market for technology companies, Maa said.

The company's choice to list through a merger with a SPAC was the right choice, he added. "The process is right for us, as it gives us more time to find the right partners, and more time for us to learn how to go from a private company to a publicly listed firm," Maa said.

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The Grab debut represents a test for SPACs, which were one of the hottest fundraising trends globally in 2020 and early this year. Fundraising activity has slowed down in recent months after regulators in the United States raised concerns about the accounting for warrants associated with these investment vehicles and optimistic projections used by some target companies ahead of their listings.

SPACs typically do not have any existing business. They are created purely as vehicles to attract investors, build up financial war chests and buy assets, usually unlisted companies, within a specified time limit, usually 18 to 24 months.

These blank-cheque companies have raised an aggregate US$151 billion this year for acquisitions, much of it in the first quarter, according to SPAC Analytics, a research firm focused on the investment vehicles. That is nearly double the US$83.4 billion raised last year and US$13.6 billion raised in 2019.

The fervour over SPACs this year prompted a number of Hong Kong's biggest investors to open their own vehicles in the US and pressured bourse operators from Singapore to Hong Kong to adopt new rules to allow these blank-cheque companies to list.

Drivers wait their turn to be served by customer service agents at Grab's driver centre in Singapore. Photo: SCMP alt=Drivers wait their turn to be served by customer service agents at Grab's driver centre in Singapore. Photo: SCMP>

The London Stock Exchange attracted its first SPAC listing last week after the United Kingdom overhauled its rules to compete for these companies.

Founded in 2012 as Malaysia's answer to taxi booking apps in the US, Grab has become a digital force offering everything from ride-hailing to financial services. It operates in eight markets across Southeast Asia.

In the third quarter, Grab's overall gross merchandise value – the total amount of sales via its platform – rose 32 per cent to US$4.03 billion.

Maa said the Covid-19 pandemic had created challenges for the business sector, but it had also created opportunities for Grab. "The pandemic has accelerated digital adoption in Southeast Asia, as it encourages more people to use digital banking and other e-commerce services."

About 40 million new internet users came online this year, according to the e-Conomy SEA 2021 report by Bain, Google and Temasek.

The company remains unprofitable, with its quarterly loss widening to US$988 million in the third quarter, driven primarily by non-cash expenses related to the merger. That compared with a net loss of US$621 million in the prior-year period.

Gross merchandise value in its delivery business increased 63 per cent to US$2.3 billion in the third quarter.

The company also said it saw a "rapid recovery" in its ride-hailing demand in the first four weeks of its fourth quarter, as coronavirus vaccination rates improved and Vietnam began to ease restrictions.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2021 South China Morning Post Publishers Ltd. All rights reserved.

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