Southeast Asian Taxi App Grab Raises $2.5B in the Latest Funding Round

On Monday, Grab, the leading on-demand Southeast Asian ride-hailing service and mobile payments platform, announced that it expects to raise $2.5 billion Series G in a record round of fundraising as it strengthens its lead over rival Uber Technologies Inc. and develop its payment platform.

Didi Chuxing, China’s ride-hailing leader, and Softbank, Japan’s mobile giant, both of which are existing investors, will invest up to $2 billion, while $500 million is expected to come from other new and existing investors, bringing the total to $2.5 billion in this round. The company said that the funding is the largest single financing in the history of Southeast Asia.

As a result, Grab will be valued at more than $6 billion at the close of this round, according to a source close to the company.

The Singapore-based company said it would use the new funds to boost its leading position in the ride-hailing industry and invest in a mobile payment platform called GrabPay. GrabPay Credits, a cashless top-up payment option, has grown 80% month-on-month since its launch in December 2016, the company claims.

The funding round comes less than a year since Grab confirmed raising $750 million in Series F round.

So far, Grab said it is the most dominant on-demand transportation platform in Southeast Asia with a market share of 95% in third-party taxi-hailing and 71% in private vehicle hailing. It operates private car, motorcycle, taxi and carpool services in 65 cities across seven countries in the region, with 1.1 million drivers and facilitates nearly 3 million rides a day.

Southeast Asia has become a center battleground for technology startups competing for a market of over 600 million people, with a growing and increasing middle class and a youthful, internet-savvy demographic.

Grab said that Didi and Softbank will continue to support its vision of helping consumers in Southeast Asia access safe transportation and financial products while creating employment opportunities.

“We are delighted to deepen our strategic partnership with Didi and Softbank,” Anthony Tan, group chief executive officer and cofounder of Grab, said in a statement.

“With their support, Grab will achieve an unassailable market lead in ridesharing, and build on this to make GrabPay the payment solution of choice for Southeast Asia,” said Tan.

Didi and Grab

Cheng Wei, Didi founder and chief executive, said by deepening strategic partnership, Didi and Grab reaffirm their shared commitment to innovating localized solutions to global urban development challenges from the world’s fastest growing marketplaces.

Didi first invested  in Grab in 2015. The companies eventually formed a global anti-Uber alliance with their ride-sharing counterparts Lyft and Ola.

“Starting with transport, Grab is establishing a clear leadership in Southeast Asia’s internet economy based on its market position, superior technology, and truly local insight,” said Cheng Wei in a statement.

“Both companies look forward to working together with communities and policymakers across Asia and fully embrace the extraordinary opportunities in the upcoming transportation revolution.”

Softbank and Grab

Softbank invested in Grab that led its $250 million round back in 2014, also its $750 million round in September 2016.

The Japanese technology giant, which is also an investor in Ola and 99, is also expanding its footprint in the transportation industry, recently co-leading a $159 million round in technology company Nauto with Greylock Ventures.

Earlier this year, Grab bought Indonesian payment service Kudo, and it has said it is seeking more acquisitions to support rapid growth.

In February, Grab said its plan to invest $700 million in Indonesia over the next four years, supporting the Indonesian government’s plan of becoming the region’s largest digital economy by 2020. Grab said it would set up a research and development facility in the capital city of Jakarta centered on  developing technology for the local market.

Currently, Grab competes with the likes of Uber, the world’s largest ride-hailing service, and Indonesia’s Go-Jek. Earlier this month, Tencent Holdings Ltd invested around $100 million to $150 million in Go-Jek, according to a source.

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