GRAB'S unprecedented fundraising shows how Southeast Asia is fast becoming a central arena in the global campaign to keep Uber Technologies at bay.
Grab raised $750 million from investors led by SoftBank Group, the largest ever for a Southeast Asian consumer technology company.
That mega-round underscores how Asia's ride-hailing services from India to Indonesia are arming themselves to fend off Uber now that the aggressive industry goliath has ceded China to Didi Chuxing.
It also bumped up its valuation to more than $3 billion, according to a person familiar with the matter.
The funding turns up the heat on Uber, which agreed to sell its Chinese operations to Didi and end a battle that cost it billions.
Grab Chief Executive Officer Anthony Tan said at the time he expected the U.S. company to pile more resources into relatively untapped Southeast Asia, a prophecy that's come true as Uber rolled out new services and features, from upfront pricing to food-delivery in Singapore.
At stake is a region on the cusp of an internet commerce boom with twice as many people as the U.S. While a far smaller market than China, it remains a wide-open field that could prove pivotal if Uber is to sustain growth beyond the U.S. and Europe.
It's also where the U.S. company is again encountering stiff resistance from well-funded, scrappy Asian operators.
Go-Jek, an Indonesian rival to Grab better known for its motorcycle taxis, just raised $550 million in a round led by KKR & Co. and Warburg Pincus LLC.
"The battle has shifted to Southeast Asia," said Song Seng Wun, a regional economist with CIMB Private Banking in Singapore.
"We have seen this in China, where you're just trying to outspend your competitor. Similarly this is what we are going to see in Southeast Asia."
Didi, Grab and India's Ola form the vanguard of Asia's burgeoning on-demand economy.
Car-hailing has taken off as smartphone use expands and riders seek simpler or quicker alternatives to taxis and public transport.
But the process of signing up drivers and attracting customers remains a costly one, requiring big subsidies and constant marketing. Uber is arguably best-capitalized as the world's largest technology startup, earning a $68 billion valuation.
Uber's experience in China may offer lessons on the battle ahead.
It threw in the towel only after more than a year of a take-no-prisoners war with Didi that played out in the media and on the streets of hundreds of cities.
That battle, waged through massive subsidies on rides, was said to have cost Uber $2 billion. Alarmed, its investors clamored for a cease-fire.
Like Didi, Uber's Asian rivals show no sign of pulling their punches. Tan, whose grandfather drove a taxi, has said his company will keep exploring new areas, such as payments.
Go-Jek CEO Nadiem Makarim told Bloomberg after the company's fundraising announcement in August he intended to use the money to become a market leader in all segments, not just motorbikes.
Yet they're no Didis. Grab's total capital now amounts to $1 billion -- a fraction of what its Chinese ally managed and what Uber has access to.
Didi enjoys government support as a champion of the domestic internet industry, whereas Uber has gone to great lengths to court Southeast Asian governments with promises to curtail pollution and traffic congestion.
While Uber is making inroads from Malaysia to Vietnam, its focus is on Grab's stronghold of Indonesia, a ride-hailing market Tan estimates is worth $15 billion.
India is also shaping up as a major battleground, as local operator Ola and Uber slug it out not just on the streets but also in courts.
"While the Uber-Didi truce stopped the bleeding, the uncertainty now is the rest of Asia," said Finian Tan, chairman of Vickers Venture Partners in Singapore.
"Uber may double down in Southeast Asia and India, so competition is going to get tougher for Grab and Ola until another consolidation occurs."
The escalating battle will put their fundraising abilities to the test. Grab turned to new as well as existing investors for its latest effort.
Didi was said to be joining that round but Grab only mentioned SoftBank in its statement on Tuesday. It won't be disclosing any other participants, the company said.
The Asian startup, whose previous backers included Vertex Ventures and GGV Capital, was said to have initially targeted as much as $1 billion.
"For Grab and Uber, the way of doing business is staying within the eyesight of their consumers. The only way to do that is to remind them you are there. And that's really about throwing money in whatever shape and form, be it advertising or subsidies," Song said.
Beyond money, Grab can call on several notable allies in its campaign. Grab, Didi, Ola and Lyft Inc. formed a strategic alliance last year to fend off Uber.
They have begun by hooking up their services, allowing users from their respective home countries to switch to a partner's network while traveling.
Grab, which said it operates as many as 1.5 million daily bookings across six countries, now plans to invest in mobile payments and sustain its pace of geographical and service expansion.
"Our vision is to drive Southeast Asia transportation forward and transform the region's mobile internet ecosystem," Tan said in a statement.
"This latest funding strengthens our ability to pursue those long-term goals as we continue to build on our market leadership."
The Washington Post
Thu Sep 22 2016
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