Friday, January 22, 2021

Grab raises $ 300 million for its financial services business

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Grab, the Southeast Asian food transportation and delivery app, has raised $ 300 million from investors for its financial services arm, valuing the three-year unit at $ 3 billion.

Hanwha Asset Management led the round, along with other investors including GGV and Flourish Ventures.

Grab Financial Group was separated from Grab in 2018 and offers payments, credit and insurance. He has been fundraising since the start of last year.

Like its competitors, Grab, which is backed by SoftBank and Mitsubishi UFJ Financial Group, has moved from its initial transportation and delivery business to creating a “super app” that offers a range of services, including banking services. .

A November 2020 report from Google, Temasek and Bain suggested that financial services revenues in the region could reach $ 60 billion by 2025.

Reuben Lai, who heads Grab’s financial services unit, told the Financial Times in an interview that he has had a “difficult year.”

“At the beginning of [2020] nobody knew how the year would unfold, ”he said, referring to the early pandemic crisis in Grab’s business. “[This fundraising] validates the business that we are slowly developing over the past two years. “

The unit’s turnover, which also includes wealth management, increased by 40% in 2020 compared to a year earlier.

“Most fintechs were very nervous about Covid-19,” Mr. Lai said, especially with lending practices that had not been tested in a crisis. Instead, there has been a huge acceleration in digital financial services and Grab’s lending models have “been proven successful,” he added. The group does not publish its non-performing credit rate but it was “within” the usual retail levels.

Grab Financial, which is not profitable, will use the funds to set up its digital bank in Singapore, hire talent and continue to grow its business, including through partnerships and acquisitions. Last month, it launched a Buy It Now platform with payback.

Mr Lai said Grab Financial had been approached by a number of special purpose acquisition vehicles over the past year, but that was not the right course for the group at this time. Blank check companies allow quick access to government markets and many target Asian technology companies.

Grab’s new financial firepower comes as it faces an increasingly competitive landscape in Southeast Asia. Not only has it been up against rival Gojek and its GoPay platform in multiple markets, it has also had to face Nasdaq-listed Sea, a $ 100 billion games and e-commerce company launching aggressively in financial services in the region.

Jixun Foo, managing partner of the Chinese office of global venture capital firm GGV, said the fundraising will help Grab Financial become more independent and give it room for growth. “We strongly believe in financial services in South East Asia in particular,” he said, adding that it was “not a win-win market”.

The fundraiser took place just days after learning that Gojek was pursue a merger with Indonesian e-commerce group Tokopedia to form an $ 18 billion business. Gojek had also had merger talks with Grab, but the two rivals were at a stalemate late last year. Grab declined to comment on Gojek’s discussions.

“It is no coincidence that this news came right after the Gojek and Tokopedia merger talks,” said a person with direct knowledge of the deal.

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