Grab: Asian travel agent plans world’s largest SPAC IPO

The Grab company is mainly known in Asia. There, however, the start-up from Singapore is one of the most popular services for food delivery and travel arrangements in many countries. According to the Wall Street Journal, the young company now wants to go public – with the help of a so-called Spac.

The acronym stands for Special Purpose Acquisition Company: for a listed company that can raise capital from investors and promise to spend the money on the takeover of a company within a first. The target company – in this case Grab – slips into the previously empty Spac shell and can save itself the tedious trip to the stock exchange.

Such spacs have long been considered an American phenomenon. But firm construction has recently become very popular in the busy tech scene. Grab’s Spac IPO would set a new record in the boom. Because the company is valued at up to $ 40 billion.

Tech investor Altimeter Capital would provide the space. Parallel to the IPO, Grab is to collect another three to four billion dollars from other donors, writes the “Journal”. The deal should be officially announced next week – if it does not break by then.

Spacs are considered a practical vehicle to simplify initial public offerings. But they also come with a number of risks. According to a study by the American elite Stanford University, Spacs are real money-burning machines.

After a successful takeover of a company, the Spacs’ shares should actually be in demand. But on average, the prices of the Spacs fell by a third after a deal. The researchers explain this primarily with the enormous costs that investors can hardly see through. The Spacs usually collected ten dollars per share when they went public. When the target is taken over, only $ 6.67 of this is left in cash.

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