Grab is set to list on the NYSE in one of the biggest ever SPAC mergers, putting Southeast Asian tech back in investors’ targets.
Grab Holdings is getting ready to go public via a special purpose acquisition company (SPAC) in the next few months — a move that is highlighting Southeast Asia’s long-ignored internet scene. The ride-hailing company has been valued at more than $40 billion.
Following on from Grab’s market debut, Traveloka is another Southeast Asian company that is also planning to list via SPAC with Bridgetown Holdings (NASDAQ: BTWN). The company is valued at $5 billion and is backed by billionaires Richard Li and Peter Thiel. Traveloka is an Indonesian unicorn company that offers airline ticketing and hotel booking services online, and like Grab, is expanding rapidly in Southeast Asia and Australia.
Investment opportunity in Southeast Asia
The Southeast Asian region is a great area for tech investors to focus on as it is home to around a tenth of the world’s population. In addition, the rate of people using smartphones is also growing extremely fast — in 2020, smartphone device activations grew 20% year-over-year. Furthermore, the region has not had a big tech company go public since Sea Limited (NYSE: SE) in 2017.
Southeast Asia’s landscape has long been dominated by financial institutions and industrial conglomerates, but these two mega deals follow a string of recent initial public offerings from the region’s tech space. Wall Street is expecting fast-growing technology start-ups here to begin grabbing the attention of investors, much like what has happened over the years in the U.S. and China. Sea Limited’s growth has been a great example of how much opportunity is in this area of the world and investors are now looking out for other similar growth opportunities.
Director at Cathay Capital, Rajive Keshup, an investment fund managing $4 billion of assets stated:
“We have seen a similar trend across other more established markets, and it’s now Southeast Asia’s golden period. We expect a lot more capital to flow into the region on the back of this mega announcement. And that is a very good leading indicator about the health of the region.”
Should I invest in SPACs?
SPAC investing can be risky as valuations can be tricky and forecasts can often be uncertain — a March report stated that 60% of SPACs lagging behind the S&P 500’s performance since their mergers. Therefore, investors need to be careful and should do lots of research before taking the plunge into a blank check company.
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