SINGAPORE, Sept 14 (Reuters): Alibaba Group Holding Ltd is in talks to invest US$3 billion into South-East Asia's biggest ride-hailing firm Grab Holdings Inc, Bloomberg News has reported on Monday, citing people who are familier with the matter.
Grab declined to comment, while Alibaba was not immediately available to respond to a Reuters request for comment.
The company, which has an estimated valuation of US$14 billion and counts SoftBank Group Corp as one of its backers, expanded into financial services, food delivery and mobile payments over the last few years, even before the COovid-19 pandemic hurt its mainstay ride-hailing business.
In June, Grab announced a 5% reduction in staff numbers as it cut costs amid slower growth.
Alibaba Group Holding Ltd. is in talks to invest $3 billion into Southeast Asian ride-hailing giant Grab Holdings Inc., according to people familiar with the matter.
Bloomberg, reported that the deal may represent one of Alibaba’s biggest bets on South-East Asia since its first investment in Lazada in 2016.
China’s largest corporation has previously had limited forays in ride-hailing but a potential tie-up with Grab gives it access to data on millions of users in eight countries, a growing delivery fleet as well as a stake in digital wallet and financial services.
The funding -- about a fifth of Grab’s last known valuation of $14 billion -- comes amid growing questions over the company’s ability to live up to its lofty price tag as it grapples with the impact of the coronavirus pandemic.
Chief Executive Officer Anthony Tan said the company is facing its "single biggest crisis,” while co-founder Tan Hooi Ling warned in May of a "long winter.” Existing investors have also been frustrated by what they see as value-destroying competition with Grab’s regional arch-rival Gojek.
The world’s biggest ride-hailing companies have waged years of costly battles in each others’ territories before they agreed to stay out of each others’ core markets.
The truce left Uber with considerable stakes in its rivals worth more than US$9 billion, including a 23.2% stake in Grab at the end of 2018.
Under the terms of a deal that Uber struck to exit South-East Asia, Grab is on the hook for more than US$2 billion to the San Francisco-based company if it doesn’t go public by mid-2023.
Masayoshi Son’s SoftBank Group Corp., an investor in all of the world’s biggest ride-hailing companies, is at the centre of the discussions.
The Japanese company has used its position as a major shareholder to push Uber to unload stakes in Grab, Didi Chuxing of China and Russia’s Yandex, the person said. Uber said in April it would write down about US$2 billion in those investments after the coronavirus pandemic upended the ride-hailing business.
Representatives of Grab declined to comment, while Uber and Softbank didn’t immediately reply to queries. Alibaba offered no immediate comment.
SoftBank has also pushed Grab to make peace with Gojek. Even as speculations about a possible merger have re-surfaced, the two are far from reaching a deal, according to people familiar with the matter.
The negotiations are hampered by a hostile relationship between the two companies and the complexity of coordinating between so many investors, they said.
Did you find this article insightful?