Could Grab CEO Anthony Tan’s US$30 million share purchase be aimed at reassuring investors?

[SINGAPORE] Grab CEO Anthony Tan’s purchase of shares of his company on Sep 21 comes in the face of a more than 50 per cent slide in the value of the counter this past year, hitting a three-year low of US$2.74.

According to filings released on Sep 21, Tan purchased 10.4 million shares at US$2.8866 for about US$29.9 million. This is his first purchase since the company went public and a contrast to his usual practice of selling down his stake.

For example, his last transaction related to Grab was in August, when he sold 400,000 shares for US$1.5 million.

Separately, Grab COO Alex Hungate also bought 299,571 shares at US$2.8936 for about US$867,000 on Sep 21.

The Business Times understands that Tan told the company about his purchase in an all-hands meeting on Sep 22. His rationale was “so that nobody in this company ever has to wonder where I stand”.

The move could be seen as a sign of shoring up confidence in Grab shares. The counter has remained weak despite positive financials and acquisitions that are earnings-accretive.

For instance, the most recent announcement to acquire buy now, pay later platform Atome Financial was largely seen as a positive move by analysts. Grab’s management had also raised its guidance for 2028, with the acquisition driving the projected growth.

The revised guidance showed that the gross loan portfolio is projected to grow from zero to over US$6 billion by 2028, and the 2025-2028 revenue compounded annual growth rate is set to rise from 20 per cent to 30 per cent. The financial services segment adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) is projected to hit US$500 million, and 2028-adjusted Ebitda was revised up from US$1.5 billion to US$1.7 billion.

The acquisition made strategic sense, as Grab preempts its regional fintech peers in trying to capture more of the consumer credit market, said Alicia Yap, equity research analyst at Citi.

Despite the deal increasing Grab’s share of the South-east Asian consumer credit market, its share price fell 1.4 per cent from US$2.91 on Sep 15 to US$2.87 on Sep 16 after the deal was announced.

Citi has a “buy” call and maintained a target price of US$6.50 following the acquisition.

Another analyst, Foo Zhiwei at Macquarie, was similarly positive in his report on the acquisition, with an “outperform” call and a target price of US$5.55. Yet he also noted that Grab’s share price has been weak.

“Recent share-price weakness looks overdone, primarily reflecting the sale of Toyota Motor’s entire approximately 5 per cent stake,” said Foo.

The Uber overhang

Tan and Hungate’s share purchases also came shortly after DBS Group Research released a report titled What can trigger a price recovery. In the report, analyst Sachin Mittal maintained a “buy” call on Grab with a target price of US$5. Mittal said Grab’s recent share-price weakness could be partly explained by Uber’s ongoing bid to acquire Delivery Hero, the parent company of foodpanda. Uber’s 13.5 per cent stake in Grab is conditional on not engaging in competition in the South-east Asia markets with Grab. The US ride-hailing platform will only be able to compete with Grab 12 months after the sale of its stake. Grab currently competes with foodpanda in Singapore and Malaysia. “We see a potential rejection of the Uber-Foodpanda deal as a potential trigger for removing the overhang. We would expect Grab shares to see a further re-rating catalyst once this concern is resolved,” said Mittal. “On the other hand, (the) Uber threat could turn real for Grab, if we see Uber exiting its entire stake in Grab.”

Meanwhile, Grab has announced a share repurchase plan of US$900 million over the next 12 months, a move that will boost earnings per share as the shares bought back will be cancelled.

“We believe Grab will step up aggressively to support the stock if the share price reacts negatively,” said Citi’s Yap.

Investors seemed unmoved by the announcement, as the share price continued to slide from US$2.87 on Sep 16 to US$2.795 on Sep 18.

The share purchases by Tan and Hungate may have reversed some of the share price slide. On Sep 22, the counter rose 8.9 per cent to US$3.16 from the previous day.

Tan’s holdings stood at 428,498 Grab shares before the share purchase, and the 10.8 million shares he now owns represents a significant part of his net worth.

The purchase was to “put his money where his mouth is,” he said at the company meeting on Sep 22.

Perhaps this is the signal the market has been waiting for to move Grab’s shares price in a positive direction. A CEO confident enough to bet on himself could be the encouraging sign investors are seeking from Grab.