Alibaba is in talks to invest $ 3 billion in stake

Photographer: Samsul Said / Bloomberg

Alibaba Group Holding Ltd. is in talks to invest $ 3 billion in the Southeast Asian passenger transport giant Grab Holdings Inc., according to people familiar with the matter.

The Chinese e-commerce giant, the only investor in the round, will spend a portion of the funds to acquire some of the Grab shares held by Uber Technologies Inc., said one of the people, who asked not to be named as the discussions are private. The deal may represent one of Alibaba’s biggest bets in Southeast Asia since its first investment in Lazada in 2016.

China’s largest corporation has previously had limited forays into private travel, but a possible tie-in with Grab gives it access to data on millions of users in eight countries, a growing delivery fleet, as well as a stake in digital wallet and services. financial One specific plan under discussion is to integrate Grab’s delivery network into Lazada, giving the Singapore startup access to a broader network of consumers, one of the people said.

What Bloomberg Intelligence says

Alibaba’s $ 3 billion potential investment in Southeast Asian Grab, as reported by Bloomberg News, could fuel user growth for e-commerce subsidiary Lazada, which has been losing ground to Tencent-backed Shopee. Lazada can take advantage of Grab’s substantial food delivery and transportation user base, whose services typically have a higher frequency of use than e-commerce.

– Vey-Sern Ling and Tiffany Tam, Analysts

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The funding – roughly a fifth of Grab’s last known valuation of $ 14 billion – comes amid mounting questions about the company’s ability to live. until its steep price tag while dealing with the impact of the coronavirus pandemic. CEO Anthony Tan said the company is facing its “biggest single crisis,” while co-founder Tan Hooi Ling warned in May of a “long winter. “Existing investors have also been frustrated by what they see as value-destroying competition with Grab’s regional arch rival Gojek.

The world’s largest ride-sharing companies have fought years of costly battles on each other’s territories before agreeing to stay out of each other’s core markets. The truce left Uber with sizable stakes in rivals worth more than $ 9 billion, including a 23.2% stake in Grab at the end of 2018. Under the terms of a deal Uber reached to exit Southeast Asia , Grab is hooked on more than $ 2 billion for the San Francisco-based company if it doesn’t go public in mid-2023.

Masayoshi Son’s SoftBank Group Corp., an investor in all of the world’s largest ride-sharing companies, is at the center of the discussions. The Japanese company has used its position as a major shareholder to pressure Uber to ditch its stakes in Grab, China’s Didi Chuxing and Russia’s Yandex, the person said. Uber said in April that it would Make about $ 2 billion on those investments after the coronavirus pandemic disrupted the private transportation business. Representatives for Grab declined to comment, while Uber and SoftBank did not immediately respond to inquiries. Alibaba did not immediately offer comment.

SoftBank has also lobbied Grab to make amends with Gojek. Even as speculation about a possible merger has resurfaced, the two are far from reaching an agreement, according to people familiar with the matter. Negotiations are hampered by a hostile relationship between the two companies and the complexity of coordination between so many investors, they said.

JPMorgan Chase & Co. is advising Grab and Goldman Sachs Group Inc. is advising Gojek, other people familiar with the matter said. One scenario discussed in the past is potentially combining just the transportation business of the companies in Indonesia, one of them said. Grab and Gojek, valued at $ 10 billion, are fierce rivals with the ambition to create an all-in-one “super app.” They also compete in financial and food delivery services.