SOUTHEAST ASIAN ride-hailing giant Grab has announced they have raised US$2 billion from Didi Chuxing and Softbank Group Corp., marking the biggest fundraising round ever in Southeast Asia.
The move suggests the three organizations are looking to edge out ride-hailing firm Uber in Asia for good. The cash injection will go a long way in helping Grab drive out the California-based company, which is currently in a vulnerable position after the loss of CEO Travis Kalanick and events of the last six months.
Yes, Grab's now based in Singapore but it evolved from MyTeksi – founded in Malaysia. My story from a few years ago: https://t.co/qrVqG8XwjO
— Sumisha Naidu (@SumishaCNA) July 24, 2017
The deal will effectively marry together Grab with Didi Chuxing, who famously bought Uber their flight ticket out of the People’s Republic last August when Uber sold a majority stake of their China operations. This new partnership appears to be a move to ultimately end Uber’s competitiveness in Southeast Asia, where Uber and Grab are locked in a fierce competition.
Grab may have more tricks up their sleeve: a source told Bloomberg that the company expects an additional US$500 million to roll in from other backers whose names have not been disclosed. Should that additional package come in, Grab would be worth more than US$6 billion, making it the region’s most valuable startup.
Grab has been leveraging on its knowledge of Southeast Asia’s difficult, fragmented market, pushing aggressively into other parts of the region ahead of its rivals in order to keep itself at the forefront of the transportation market. The company currently controls 95 percent of third-party taxi-hailing services in Southeast Asia, and operates almost 3 million daily rides.
“Grab has been a lot more aggressive than Uber, making new acquisitions and launching new services in the region,” said Ajay Sunder, the vice president of digital transformation at Frost and Sullivan, Singapore, to Bloomberg.
“Uber will have to make a call at some stage.”
— Jacky Wong (@jackycwong) June 9, 2017
However, they have their own fair share of problems: homegrown Go-Jek is ensuring that Grab will have to fork out some serious cash if it intends to unseat the popular service, whose dominance has largely been led by its super-specific know-how of the Indonesian transportation landscape, as well as their wildly diversified portfolio of services.
However, Grab has made quite an impression with Softbank CEO, Masayoshi Son, who has thus far ensured that his company’s Vision Fund has invested in every round Grab has conducted so far. Grab’s success has, according to Son, been due to the company’s agile and fast adoption of next generation technologies.
“Grab is using technology to address transportation and payments, some of the biggest challenges present in Southeast Asia,” Son said in a statement.
The funding round could also provide some insight into what Grab plans for the future. Sunder from Frost and Sullivan says the fact that the company’s existing investors are continuing to pump in more and more money is a sign that we are witnessing the early stages of a possible initial public offering.