Southeast Asian ride-hailing company Grab has announced its plan to go public in partnership with a New York-listed special purpose acquisition company (SPAC) controlled by Altimeter Growth. The deal values the company at US$39.6 billion, the largest SPAC merger to date.
Altimeter is a Silicon Valley group known for investing in late-stage technology companies. The combined company’s securities will be traded on the Nasdaq in the coming months.
Advising Grab were Skadden Arps Slate Meagher & Flom, and Hughes Hubbard & Reed. Ropes & Gray advised Altimeter Growth. Wilmer Cutler Pickering Hale and Dorr advised Altimeter Capital Management and Altimeter Capital Markets, which are affiliated with Altimeter Growth.
Hughes Hubbard M&A partner Gerold Niggemann told Asia Business Law Journal there was a lot of optimism for SPAC deals in the region. Indonesian unicorns Traveloka, Gojek and Tokopedia are reportedly evaluating SPACs as a possible option to go public.
“Many market observers expect to see more SPAC mergers in Southeast Asia, probably because not a lot of tech companies from the region are listed as public companies yet,” said Niggemann.
“Also, in particular, the digital economy is rising throughout the region. But SPACs will have to find a viable target company to merge with.”
A SPAC is a company with no commercial operations formed strictly to raise capital through an initial public offering (IPO) to acquire an existing company. It has become popular in the past few years, raising record amounts of IPO money.
However, the merger of a SPAC with a target company comes with several challenges, including complex accounting and financial reporting that may differ from a regular M&A.
“In a SPAC merger, the SPAC technically acquires the target, but the target’s shareholders can often hold 80-90% of the combined company,” said Niggemann. “Therefore, it is really different from a normal M&A transaction, where the buyer acquires control of the target. The target will continue running the business, not the SPAC.”
Skadden’s team was led by M&A partners Jonathan Stone in Hong Kong and Rajeev Duggal in Singapore, with the help of corporate counsel Andrew Cohn in Hong Kong and Zachary Levine in Singapore. The firm’s regulatory partners across jurisdictions also assisted the team, namely Steve Kwok in Hong Kong and Michael Leiter and Eytan Fisch in Washington. Meanwhile, the Hughes Hubbard team was led by M&A partners Ken Lefkowitz and Niggemann in New York.
Ropes & Gray’s M&A partner Paul Scrivano in New York and counsel Sarah Davis in Boston headed the deal team. The WilmerHale team was led by investment management partners Leonard Pierce and Timothy Silva in Boston, and corporate partners Glenn Pollner in New York and David Westenberg in Boston, along with investment management senior counsel Phillip Gillespie and counsel Seth Davis in Boston.
Last year, SPACs raised a total of US$83.4 billion from 248 IPOs in the US. This year is seeing a significant increase, with US$99.9 billion from 308 IPOs until 19 April, according to SPAC Research, a cloud-based platform providing information on US-listed SPACs.