SINGAPORE - Southeast Asian ride-hailing and food delivery giant Grab is exploring a listing in the United States this year, encouraged by robust investor appetite for initial public offerings (IPOs), three sources familiar with the matter told Reuters.
Grab's IPO could raise at least $2 billion, one of the sources said, which would likely make it the largest overseas share offering by a Southeast Asian company.
"The market is good and the business is doing better than before. This should work well for public markets," he said.
The plans, including the size of the issue and timing, have not been finalized and are subject to market conditions, said the sources, who declined to be identified as they were not authorized to speak about the matter.
Singapore-based Grab declined comment on the potential IPO.
Grab, whose backers include SoftBank Group Corp and Mitsubishi UFJ Financial Group, has expanded rapidly from its beginnings as a ride-hailing venture in Malaysia in 2012 to become the region's most valuable startup worth more than $16 billion.
The company has raised more than $10 billion as it becomes a one-stop shop for services such as food delivery, payments and insurance in Southeast Asia, home to about 650 million people. It recently gained a digital bank license in Singapore.
Grab's total group net revenue jumped by about 70% year on year in 2020 and has recovered to be comfortably above pre-pandemic levels.
Moody's said this month Grab had cash holdings of about $3.2 billion, which the ratings agency "expects will be sufficient to cover negative operating cash flow, capital spending at its transport and food delivery businesses and scheduled debt maturities over at least the next two-three years."
One of the sources said he expects Grab's IPO to raise substantially more than $2 billion as some of its long-term investors trim stakes and new investors come on board.
Grab has said its ride-hailing business is breaking even in all its operating markets, including Indonesia, the biggest. It expects its food delivery business to break even by the end of 2021.
The IPO plans would come after merger discussions with Indonesian rival Gojek were derailed.
Gojek and Indonesian e-commerce leader Tokopedia are in advanced talks for a $18 billion merger ahead of a potential dual listing in Jakarta and the United States, Reuters reported this month.
As consumers increasingly adopt online services amid lockdowns to prevent the coronavirus from spreading, investors are paying more focus on market leaders.
Grab caught global attention when Uber sold its Southeast Asia business to the company in 2018 after a costly five-year battle and in return took a stake in Grab.
It now operates in 397 cities across eight Southeast Asian countries and its app has seen 214 million downloads. Grab's food delivery business overtook the mature transport division to become the company's biggest segment last year.
"It's quite clear that investors are rewarding growth and market share," said the second source, pointing to a 15-fold surge in shares of Singapore-based e-commerce, gaming and payments firm Sea since its 2017 listing in New York.