SoftBank and Didi hand US$2 billion to Grab, making it SEA's most valuable startup

Singapore

GRAB raised US$2 billion from Didi Chuxing and SoftBank Group Corp in the largest-ever venture fund-raising in South-east Asia, as it joins forces with the Chinese company that drove Uber Technologies out of China.

The deal cements a loose alliance between Didi and Grab, which competes against Uber in markets from Malaysia to Thailand. The Singapore-based ride hailing company said on Monday it expects to close another US$500 million from unspecified new and existing backers. That will take its valuation north of US$6 billion, making it the most valuable startup in South-east Asia, a person familiar with the matter said.

The record financing follows Uber's retreat from Russia and China, massive markets where Uber spent billions but ultimately capitulated to well-financed and savvy local rivals. In South-east Asia, it's waging a costly war against not just Grab but also Go-Jek, which is holding its own on its home turf of Indonesia.

SoftBank has been the primary financier of the battle against Uber in Asia, first putting US$5 billion in Didi before an investment in Grab and India's Ola. The Grab round is one of its largest investments in the region, coming on the heels of the establishment of its mega US$93 billion Vision Fund.

"Grab is using technology to address transportation and payments, some of the biggest challenges present in South-east Asia," SoftBank chairman Masayoshi Son said in a statement.

Asia's largest ride-hailing services are arming themselves for war with Uber, now that the cessation of activities in China and Russia allows it to focus on other fledgling markets around the world.

South-east Asia - a region on the cusp of an Internet commerce boom with twice as many people as the US - remains a wide-open field that could prove pivotal if Uber is to sustain growth beyond the US and Europe. When it closes, the current investment in Grab will eclipse a previous regional record of US$750 million set in September, in a round said to have given it a valuation of more than US$3 billion.

Go-Jek, better known for its motorcycle taxis, raised US$550 million in a 2016 round led by KKR & Co and Warburg Pincus LLC. On Monday however, Grab said it has 95 per cent of third-party taxi-hailing in South-east Asia and handles 71 per cent of private vehicle hailing, and has almost three million daily rides.

For its part, Uber is now grappling with a litany of issues back home, including a string of scandals revolving around gender discrimination and the departures of senior people from former chief executive officer Travis Kalanick on down.

Its shareholders and board, led by early backer Benchmark, have discussed selling some of their shares to SoftBank and other potential investors, people familiar with the matter have said. BLOOMBERG