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SINGAPORE (BLOOMBERG) – Alibaba Group Holding is in talks to invest $ 3 billion (S $ 4.1 billion) in Southeast Asian passenger transport giant Grab Holdings, 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, 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 ride-sharing, but a potential alliance with Grab gives it access to millions of data. of users in eight countries, a growing delivery fleet, as well as a stake in digital wallet and financial services.
The funding, roughly a fifth of Grab’s last known valuation of $ 14 billion, comes amid growing doubts about the company’s ability to deliver on its steep price tag as it grapples 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 a sizable stake in its rivals worth more than $ 9 billion, including a 23.2 percent stake in Grab at the end of 2018.
Under the terms of a deal Uber struck to exit Southeast Asia, Grab is on the hook for more than $ 2 billion for the San Francisco-based company if it doesn’t go public by mid-2023.
Masayoshi Son’s SoftBank Group, 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 it would make about $ 2 billion in those investments after the coronavirus pandemic disrupted the ride-sharing 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 is advising Grab and Goldman Sachs Group 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.
Indonesia, by far the largest and most promising market in Southeast Asia, remains the key sticking point in any potential merger, with both companies wanting a majority stake in the merged business there, according to the people. Gojek, considered the Indonesian national champion whose app has been downloaded the most in the country, will not be forced to make a deal, according to another person familiar with the discussions. In the past, he has denied merger speculation.
Any deal would likely face regulatory hurdles because it would combine the two main players in the region, reducing competition in transportation and in newer fields like food delivery and finance.
The pandemic and the shutdown measures have hit both companies, forcing them to cut jobs and optimize their businesses. Still, Gojek raised new capital from Facebook and PayPal Holdings, a show of confidence in its efforts to create a digital payments platform in the region.
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