[SINGAPORE] Grab’s recent move to upsize its five-year convertible note size to US$1.5 billion is timely given that the Asean digital sector – which includes food delivery – is likely to see more competition, said a Maybank Securities report.
Grab’s net cash position will rise to US$7.7 billion post-issue and, on conversion, could lead to a 4 per cent dilution for existing shareholders, estimated Maybank Securities’ analysts Hussaini Saifee and Etta Rusdiana Putra in a Jun 16 report.
One reason for this large offering is that Grab is bracing for new competition in the Asean market.
According to Maybank’s investment banking group research survey across Asean users from April to May 2025, 57 per cent of respondents indicated Grab to be their preferred ride-hailing operator. This is more than double of the second most preferred option, Gojek, which came in at 27 per cent.
“While competition remains rational and Grab is gaining share, rising threats from players like Vietnam’s Green and Smart Mobility (GSM) brand and Chinese giants such as Meituan or Didi (Chuxing) could intensify pricing and driver incentives, demanding financial agility,” said the analysts.
Vietnam’s electric taxi brand Xanh SM, through its GSM brand, is rapidly expanding across Asean, signalling the potential to grow into a major regional green mobility and delivery player, they added.
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“After successful launches in Vietnam, Laos, and Indonesia, GSM debuted a 2,500-vehicle electric taxi fleet in the Philippines as part of its ‘Go Green Global’ strategy.”
Grab and GoTo were also rumoured to be in talks to merge, before both issued disclosures stating otherwise.
The analysts noted that this could lead to the possibility of GoTo tying up with the likes of Chinese on-demand service providers such as Meituan or Didi.
Chinese ride-hailing giant Didi has also steadily expanded beyond China, entering markets like Latin America, Australia, Japan, and more recently Hong Kong.
However, the analysts pointed out that Didi is contractually restricted from expanding into Asean’s ride-hailing market given its stake in Grab.
“This could change if Didi exits its stake in Grab.”
This is another reason for Grab to raise capital, Maybank Securities’ analysts said, to prepare itself should any of the large shareholders exit their stake.
“Several of Grab’s large shareholders, SoftBank, Didi, and Uber, hold significant stakes and may be considering partial or full exits amid portfolio shifts and regulatory pressures.”
“By raising capital through convertible notes, Grab could position itself to deploy funds for share buybacks, which can help absorb selling pressure and stabilise the stock if such exits materialise,” the analysts said.
They noted that foodpanda remains a potential acquisition target for Grab, but they believe that the transaction size is unlikely to necessitate a capital raise.
The analysts also noted that Grab’s capital needs for its fintech arm remain limited with a loan book at US$566 million.
“The current loan book is relatively small and well-diversified across use cases and user segments, which keeps credit risk manageable.”
This approach reduces the likelihood of large losses and minimises the need for significant capital buffers and equity injections, they added.
