Grab picks up US$750m funding

Singapore

THE race to become the region's top ride-hailing service just got a notch more brutal.

On Tuesday, Grab announced that it has raised US$750 million in Series F funding, the largest for a South-east Asian consumer-tech startup. Led by long-time investor SoftBank, the injection takes Grab's capital position past US$1 billion, reportedly making it the region's best-capitalised tech startup after five years in the business.

Its rival, San Francisco-based Uber, has raised US$8.71 billion since 2009, about eight times more, in its seven-year history.

Notably, New York-based fund Tiger Global is an investor in both Grab and Uber (and also China's Didi Chuxing and India's Ola) - in yet another sign of the cut-throat battle among global ride-hailing platforms.

Grab's co-founder, Anthony Tan, when asked whether his outfit was making money, told The Business Times that Grab was "profitable in a few of the more mature businesses across the region", but did not disclose country specifics.

He said: "We are particularly excited about the growth opportunity in Indonesia, where we see an almost US$15 billion market for ride-hailing services alone, and the potential to extend GrabPay's platform regionally."

With the latest infusion of funds, Grab will continue to focus on South-east Asia; in particular, it will invest in Indonesia, develop its mobile payments solution GrabPay and improve its tech.

Grab said that it would expand the diversity, density and efficiency of its services in Jakarta, where its current offerings include GrabCar, GrabBike and GrabFood - services it described as "relevant and transformative"; GrabCar and GrabBike services in Indonesia grew by 250 times in a year as at H1 2016.

Grab said that it would continue to bank on GrabPay, and expand its range of local payment solutions through GrabPay across the region. It said: "With 43 per cent of the population unbanked, South-east Asia remains a largely cash-based transaction economy, with room to develop better mobile payment options."

Grab will also continue to invest in data-science and machine-learning capabilities to enable development of services such as predictive demand and driver-and-user targeting; it will also develop its proprietary point-of-interest mapping database.

Asked what investments Grab is making in Singapore, Mr Tan said that the company's strategy continued to be creating the best possible experience for drivers and passengers here, as it extends its market leadership across the region.

He said that Grab was "setting the standard" in serving local needs, which other industry players are "only now trying to test and follow". For instance, while Grab adopts a similar pricing model as its peers - a take rate for each ride (including for taxis) - it has been able to monetise its cash payments from Day One because it offers a cash-payment option.

Mr Tan said: "Credit card penetration is low in South-east Asia and commuters traditionally pay for taxi rides in cash. We invested years ago in an operational network across the region that supports cash."

The platform requires drivers to top up their Grab driver wallets before they are able to accept bookings. This arrangement enables the company to deduct a fee for Grab rides paid for in cash, paving the way for the company to monetise cash payments.

Notably, Uber introduced a pay-in-cash option only in April this year, marking a departure from its card-payment-only policy, with which it had debuted in Singapore in 2013.

Liu Qizhang, senior lecturer at the National University of Singapore Business School, told BT that Grab's latest equity financing pointed to "a battle for capital position and more".

"I think the investors are looking beyond just ride-hailing services. The bigger gems are mobile payment and the peer-to-peer financing market, which GrabPay targets. It will be another brutal battle."