Grab eyes US$1.25bil bond sale for acquisitions
Aside from possible acquisitions, Grab said it plans some share buybacks. — Bloomberg
HONG KONG: Grab Holdings is planning a US$1.25bil sale of bonds convertible into stock, partly to bulk up its warchest for acquisitions amid signs that talks to take over Gojek parent GoTo Group have stalled.
Singapore-based Grab, whose app is ubiquitous in South-East Asia for ride hailing and food delivery, will issue convertible bonds that mature on June 15, 2030, it said in a statement on June 9.
The securities will carry a coupon of as much as 0.5% a year, payable semiannually, according to terms of the deal seen by Bloomberg News.
Aside from possible acquisitions, Grab said it plans some share buybacks – the company has US$274mil remaining under its share-repurchase programme as of the end of March. The bonds will be redeemable, under certain conditions, from mid- 2028.
Grab's offering is the largest Asian convertible-bond deal denominated in US dollars since Ping An's US$3.5bil deal in July 2024, and the biggest by a non-Chinese company since South Korean chipmaker SK Hynix's US$1.7bil issuance in 2023.
Ping An last week also issued convertible bonds worth US$1.5bil, denominated in Hong Kong dollars.
As for the GoTo acquisition, Grab on June 9 signalled that it was halting or at least pausing a planned US$7bil acquisition.
The pair of ride-hailing and food-delivery companies have held on-and-off talks for years but a combination never materialised, partly because of antitrust concerns likely to arise from combining the two dominant players in South-east Asia.
'The parties are not involved in any discussions at this time and Grab has not entered into any definitive agreements,' Grab said in a statement.
'Indonesia continues to be an important country in serving our mission as we continue to outserve our Indonesian customers, driver and merchant-partners.'
Grab's stock has advanced 41% in the past 12 months as Grab's profitability improved, but remains down more than 50% since its listing in New York through a merger with a blank-cheque firm in late 2021.
Indonesia's antitrust agency said in May it would look into potential risks and urged the companies to ensure any deal will not create a monopoly.
Indonesia's sovereign wealth fund Danantara has been considering a role in the combination, possibly helping to assuage concerns in the government resulting from the sale of the national tech champion, Bloomberg News reported last week.
A potential sale of GoTo has sparked worries among Indonesia's political leadership about the loss of independence and developer and engineer jobs.
Some have also expressed concerns that ride-hailing and food-delivery prices would rise if Grab becomes dominant in a tough economy where consumers are already facing hardship.
Grab, the largest of South-East Asia's ride-hailing and delivery firms, has been locked in fierce competition with GoTo for almost a decade. The Singapore-based company is the leading provider in its home market and countries including Malaysia and Thailand.
While the rivalry has weighed on its efforts to reach consistent profitability, it has benefited from user growth in the emerging economies it operates in.
On-demand transactions – including meal delivery – grew 19% in the two-month period covering April and May, versus a year earlier, Grab said in a separate release on June 19. — Bloomberg
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