Southeast Asian on-demand transport rivals Grab and Gojek deny that they are involved in talks to merge, but today Grab announced a piece of news that — at the very least — is sure to divert attention from that story, or more likely stoke the fires of speculation that it is indeed gearing up for a deal: Grab said that it has raised $856 million more in funding, in two tranches from strategic Japanese investors, specifically to help grow the other arm of its business, in payments and financial services. Grab did not disclose its valuation with the latest investments.
The news comes directly on the heels of rumors that Grab is in talks to merge with its big regional rival, Gojek. Both companies have denied the reports directly to TechCrunch, although a source close to one of them confirms that they have been talking for 3.5 months — starting just after Gojek founder and former CEO left the company in October to join Indonesian president Joao Widodo’s cabinet.
The funding is coming in two tranches that were actually announced separately.
The first, from Mitsubishi UFJ Financial Group, Inc, will see the firm invest “up to $706 million into Grab to jointly develop next generation bespoke financial services in Southeast Asia to boost financial inclusion in the region,” the two said in a joint statement. MUFG and its regional affiliates will also become “First Choice Bank” to Grab, meaning that Grab will use MUFG first in countries where it operates when it requires a banking partnership for payments or other financial services.
The second tranche is coming from TIS INTEC, an IT solutions business out of Japan, which is putting in $150 million along with a strategic deal to help Grab develop the infrastructure needed to run is growing financial services business, starting with digital payments by way of GrabPay.
Both deals are important not just for Grab but its new investors, which are looking for more opportunities and customer channels into a wider region of Asia beyond their common home market of Japan. Grab’s growth of its “super app” — in which it (like others pursuing a similar strategy) provides a one-stop shop for consumers to both see to their transportation needs, but also other aspects of their connected consumer life, such as eating, entertainment and managing their money — has involved the company partnering with a number of other financial giants, including Mastercard, Credit Saison, Chubb, and ZhongAn Online P&C Insurance Co. Ltd.
The financing development looks like it may have been precipitated by the report that surfaced on Monday from The Information , which reported that it is in merger discussions with Gojek, based out of Indonesia and also a big player in on-demand transportation and related services in the region.
A Gojek spokesperson told TechCrunch that “there are no plans for any sort of merger, and recent media reports regarding discussions of this nature are not accurate.” A Grab representative, meanwhile, said that the company declines to comment on market rumors and speculation.
A merger is one possible solution to the costly rivalry being waged by the two companies in Southeast Asia and the statements may be an effort to ward off attention before a deal nears completion.
With a $14 billion valuation and investors including SoftBank, Uber and Didi Chuxing, Grab is the larger company, but it competes head-to-head in Indonesia with Gojek, which has financial backing from Tencent, Google and Visa, among others. Both companies offer a wide range of services, including ride-hailing, food deliveries and payments, through their apps.
According to the Information, executives from Gojek and Grab have met occasionally over the past several years, and began to discuss a merger more seriously recently. But the two disagree over the business’ valuation and how control of the combined company would be split, with Grab telling its major investors that Gojek wants its shareholders to hold 50% of its combined Indonesian operations, and wish to avoid Gojek’s operations getting absorbed by Grab.
If they agree to merge, the two companies would potentially also deal with regulatory challenges similar to the ones Grab had to deal with when it bought Uber’s Southeast Asia operations in 2018.
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