In a largest venture fundraising in Southeast Asia, Singapore-based ride-hailing service Grab has raised close to $2 billion from Softbank and Didi Chuxing. The company also expects to close another $500 million from existing backers at the valuation of $6 billion, according to a report from Reuters.
The deal signifies a partner ship with Softbank and Didi, who played instrument role in driving out its rival Uber, who spent billion in China market before giving up to local players, from China.
The investors now believe that they can repeat the success of local player outing Uber. That hope of defeating the US firm was reignited this month when Uber agreed to sell its business in Russia to local rival Yandex. Uber retreated from Russia merging with local Yandex with $225 million investment in lieu of 36 percent stake.
“ Grab is establishing a clear leadership in Southeast Asia’s internet economy based on its market position, superior technology, and truly local insight,” Cheng Wei, founder and CEO of Didi, was quoted by Techcruch.
Grab operates in 36 cities across seven countries in Southeast Asia, where it claims over 50 million downloads from users and 1.1 million drivers on its platform.
In Southeast Asia, there is intense competition between Uber, Go-Jek and Grab. In the ride-hailing space world over, local players have been showing greater initiative in terms of launching services such as digital payments, Ajay Sunder was quoted by sources, who is vice president of digital transformation at Frost & Sullivan in Singapore.
Of late, Grab has been making acquisitions and foraying into new services and using technology to address transportation and payments.
Grab is reportedly shares good bonding with Softbank. SoftBank has too been financier of the battle against Uber in Asia, first putting $5 billion in Didi alongside an early investment in Grab and India’s Ola. The Grab round is one of its largest investments in the region, coming on the heels of the establishment of its mega Vision Fund.
This current investment in Grab will eclipse a previous regional record of $750 million set in September, in a round said to have given it a valuation of more than $3 billion. Go-Jek, better known for its motorcycle taxis, raised $550 million in a 2016 round led by KKR & Co. Grab is also preparing for an initial public offering.
Earlier in April, Softbank announced investment of about $250 million in India’s ride-hailing app Ola. The investment, which was closed last year, had been through SoftBank’s subsidiary SIMI Pacific Pte Ltd in Ola’s parent company ANI Technologies.
Uber has been left with no choice but expected to increase its focus on India and Southeast Asia after retreating from China and Russia.
Will backing from Softbank and local players force Uber to be more aggressive in India and Southeast Asia ? Or will it again be same story for Uber as unfolded in China and Russia?
Do watch this space as the story unfolds.