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Grab secures US$700m in debt financing to build S-E Asia's largest fleet

Singapore

BANKS have emerged the latest players in ridesharing.

On Friday, Singapore-headquartered ridesharing company Grab announced that it has secured debt facilities of up to US$700 million from "leading global and regional banks" - the largest ever debt financing round raised by a South-east Asian startup. The names and number of the participating banks were not disclosed. When asked if venture debt was among the debt facilities secured - that is, a loan that may come with warrants or rights to purchase equity in the borrowing company - Grab would not comment.

Lim Kell Jay, head of Grab Singapore, told The Business Times that Grab had been attracting a lot of interest from "reputable banks" and it was "good" for the company to have diverse sources of funding. Prior to this debt financing round, Grab had raised nearly US$3.5 billion in venture capital and private equity from investors including Temasek and SoftBank.

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Mr Lim said: "Our financial partners recognise that Grab has incredibly strong risk management capabilities and proven operational excellence and, as a result, we have secured terms that are highly favourable to Grab."

The money will be used to create the largest car rental programme in South-east Asia by the fourth quarter of 2018, said the company. Grab will extend its car rental platform, GrabRentals, beyond Singapore and Indonesia to the rest of the region, and grow its fleet of private hire vehicles in Singapore.

On Friday, Grab added that it has signed an exclusive partnership with SMRT to build the largest and most advanced taxi and private-hire car fleet in Singapore, which will include hybrid and fully electric vehicles. Grab will have exclusive access to SMRT's current and future fleet management capabilities, in addition to its entire network of taxis and Strides private-hire cars.

Lee Der-Horng, director of the NUS-LTA Transport Research Centre, hailed Grab's latest financing and deepened partnership with SMRT as "very influential and impactful". He told BT: "Given this new development, the difference between Grab-SMRT and Uber-Comfort is becoming very clear."

In August, taxi giant ComfortDelGro announced that it has begun talks over a strategic alliance with Uber, which may include a collaboration in relation to the management of fleet vehicles and booking software solutions in Singapore.

Prof Lee said: "Uber-Comfort has thousands of unhired vehicles. Grab is, however, the opposite. The market is saying that Grab's fleet utilisation is well above 90 per cent, which is spectacular. And now, Grab is going to grow their fleet further with the newly-raised US$700 million."

Just last month, Grab said that it has invested US$15 million in California-based driverless car technology startup, Drive.ai, in a move that will further accelerate its influence in the global land transport space.

While the Uber-Comfort alliance is not yet finalised, Prof Lee said he was sceptical about how it can compete meaningfully with Grab-SMRT. "Somehow, Grab's snowball effect is there."

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