Indeed, one of the biggest gripes about the IPO process is that investment banks tend to price shares too low in order to reward big money managers like T. Rowe Price and Fidelity. “This is the equivalent to Grab doing an IPO, and selling shares for $10 that jumped to $15,” Ritter said.

Why Grab went public through a SPAC

Altimeter Growth shares have climbed to $15 from $13.95 before the deal was announced, suggesting stock market investors like the merger. Grab is unlike any company in the US or Europe. It started out in 2012 as a ride-hailing service and has morphed into a sort of a Southeast Asian digital conglomerate: Users can also order food, groceries, or tap into financial services through the app, which the company says has more than 214 million downloads. The combined company will trade under the ticker GRAB when the transaction is completed in the coming months

Grab says it has a major tailwind as online penetration in Southeast Asia, with a population twice that of the US, accelerates. The company claims its addressable market will triple from 2020 to more than $180 billion in 2025.

There are some advantages to Grab going public via SPAC. For example, it gives investors certainty about Grab’s valuation, said Adam Birnbaum, executive director at GP Bullhound. The SPAC market, which is more speculative in nature, may be a good fit for such a unique company, which resembles Uber, Deliveroo, and Citigroup put together and is perhaps harder to value. “This is the kind of company that lends itself to the SPAC market,” Birnbaum said.

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