What Grab won’t tell you in its investor presentation

We noticed an omission or two in Grab’s slides. [Read from your browser]( Editor's Letter Dear {NAME} When big news breaks, journalists have to grab the bull by the horns. Last week, of course, was all about Grab. We worked overtime to scrutinize its investor presentation and came away with [six surprises from its jealously guarded numbers.]( We also discussed how [Grab’s superpower may not be its app, but its driver network](. We’ve been looking at Grab and Gojek from all angles, including the big debate about whether [their drivers should be considered employees instead of contractors](. This was highlighted as a risk factor in Grab’s slides, and it’s up to the company to ensure that its drivers make good income to prevent this from happening. We’ve also [uncovered Southeast Asia’s hidden Grab and Gojek mafia]( - the founders and investors that enter the startup world after stints at these regional giants. (Someone liked our visual so much that they requested for a copy to print and frame up.) These alumni networks can help startups succeed, whether in clearing roadblocks, raising money, or snagging customers. And as these companies list and shareholders sell their shares in the years ahead, we can expect this network to grow. But there’s more to this field than Grab and Gojek, and we’ve cast our nets wide to look at the rest of it. [We’re counting at least 11 runners in the super-app race]( in our latest landscape map. Grab’s listing is closely watched because its performance could affect the success of other super apps. It could also impact Grab’s wider ecosystem of customers and vendors. For instance, we charted [Xendit’s quick rise in Southeast Asia, which had a helping hand from customers like Grab](. If Grab continues to thrive, Xendit will benefit, too. It goes without saying that Grab’s continued success is no sure thing. That said, it needs to project confidence to investors in order to raise that sweet cash. Naturally, investors want the other side of the story, and in service of that, today’s letter will be a bit longer. Here are three things that were omitted from Grab’s slide deck that you might want to know about. Where art thou, Uber? Check out this slide of Grab’s comparable companies. Notice something missing? It’s Uber. Why is it that the company, which plays in both ride-hailing and food delivery, is left out, while PayPal, which is a pure payments player, and DoorDash, which only does food delivery, are added in? Uber, incidentally or not, has a far lower revenue multiple than the players listed here. In fact, [our own analysis]( which covers a larger basket of players, including those with lower revenue multiples like Alibaba, Lyft, and Grubhub, puts Grab’s valuation at around US$30 billion. And we thought we were optimistic. One investor I know would only buy Grab shares if the company was valued at between US$15 billion and US$20 billion. To be clear, calculating a company’s valuation, especially using the comparables method, is more art than science. It can be easily adjusted to fit whatever narrative you want. SPAC’s credibility issue Investors and regulators are [becoming wary of special purpose acquisition companies or SPACs](. While SPACs present an easier route to a public listing, the lower barrier to entry and lighter regulatory scrutiny results in more low-quality offerings. Grab, to be sure, is a credible company. Meanwhile, Altimeter, the SPAC that Grab is working with, has committed to a three-year lockup period for its shares. It’s an unusual move that shows it’s not just out to make a quick buck. Grab’s financial services business was hit last year The truncated deck on Grab’s website excludes this slide, which is included in the more detailed one filed by Altimeter: It shows here that Grab’s financial services arm, which made most of its money from payments, fell by more than half in the early days of the pandemic (though it recovered by the end of 2020). The decline was out of step with the rest of the business: Transactions in deliveries and mobility dropped by only 20% between 2Q20 and 1Q20. What gives? We’re not exactly sure, but there are two possibilities: Grab reduced payment commissions to boost transactions, or it wasn’t charging payment fees for its deliveries arm, which is a relatively new business. --------------------------------------------------------------- I’ll just end with some recent praise from a reader: “The quality of Tech in Asia’s articles have really improved. From articles covering the Grab and Gojek mafia to in-depth reviews of up-and-coming companies like Xendit, Tech in Asia has crafted a unique voice. Bravo to the execution and focus on quality journalism.” As always, you can support our work by [getting a subscription](. Looking forward to serving you even better. Best regards, Terence Lee Editor-in-Chief To ensure that you don't miss out on the biggest tech news and analysis, add newsletter@techinasia.com to your address book, contacts, or safe sender list. Or simply move us into your inbox. Tech in Asia’s newsletters are handcrafted daily with love - and sometimes powered by good coffee. Don't want to receive these emails anymore? [Unsubscribe](. --------------------------------------------------------------- Copyright © 2021 Tech in Asia, All rights reserved. 51 Bras Basah Rd, #05-5061, Singapore 189554