Grab, the Singapore-based ride-hailing company, is considering spinning off its payments and financial services businesses to boost growth as competition intensifies in south-east Asia’s ride-hailing market, executives and investors said.
South-east Asia’s biggest start-up, which is valued at around $13bn and backed by Japan’s SoftBank, may raise capital for the two business units separately with a view to spinning off one or both of them at a later date, the executives and investors added.
Such an approach would mirror the actions of Alibaba, the Chinese ecommerce giant, which spun off Alipay and Ant Financial, its payments and financial services arms. Ant Financial is now valued at around $150bn.
“Many investors have approached us,” said Anthony Tan, chief executive of Grab. “They are both financial and strategic. The capital structure of our business is something we look at closely.”
“If we spin out these operations it isn’t just about faster growth, it is to give them more autonomy to capture the opportunity,” said a second person familiar with the matter. “Financial services are a cash cow.”
The proposed moves reveal an evolutionary dynamic. Companies such as Grab and its Jakarta-based rival, Go-Jek, start life as ride-hailing groups but soon build up customer databases that are applicable to other online businesses.
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“We see food as a big growth driver for us as well. We expect our food delivery business to be four times larger than any other player regionally by the end of the year,” said Mr Tan.
In the US, by contrast, companies from Uber to Amazon and Apple have been slow to innovate. They have had little incentive to do so — credit cards are ubiquitous and consumers are in the habit of paying with them despite the hefty fees that go to the credit card companies such as Mastercard and Visa.
Investors including family offices and venture capital firms have already been approached about their interest in putting money into separate arms of Grab.
Details have yet to be worked out. One complicating issue is the fact that regulators view financial data as sensitive, and wish to see local data stay within their jurisdiction. Grab has local minority partners in each of the south-east Asian jurisdictions in which it operates to minimise the possibility of a regulatory backlash.
Meanwhile, in order to expand its financial operations, Go-Jek has pursued an aggressive mergers and acquisitions strategy, acquiring several fintech firms in its home market in the race for scale.
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