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Grab co-founder Nasdaq list will dramatically increase voting rights

Grab co-founder Nasdaq list will dramatically increase voting rights


Malaysian Internet entrepreneur Anthony Tan will dramatically increase his control over Grab by his Southeast Asian technology team with Nasdaq this year.

In a move that would be the envy of its Silicon Valley members, Grab CEO and founder will hold 60.4% of the voting power in the company with a stake of just 2.2 percent.

This is a feat comparable to that of Facebook’s Mark Zuckerberg and unprecedented for a deal tied to a company to buy a special target.

The funds were in papers submitted after the Singapore company last week presented a record contract Joining the New York-listed Spac, the Silicon Valley group’s Altimeter-generated Spac valued the business at nearly $ 40 billion.

The archiving He also revealed that the company, which provides its superapps, shipping and financial services, has reported violations of anti-corruption laws to the U.S. Department of Justice.

Proponents say Tan needs control to make quick and difficult decisions to navigate Grab’s eight markets. The agreement is a crucial test of hunger for international investors for a technology company with operations in multiple and emerging regions of Southeast Asia.

Experts say it is the first time that the Spac deal has kept a founder’s voting rights at that level since he retained the management of the company sponsored by SoftBank.

The right to vote on a majority of a CEO is “unprecedented” for a company looking for a Spac career, said Robson Lee, a partner in Singapore’s law firm Gibson Dunn. “While it’s not uncommon for high-tech companies looking for a listing to establish management shares with additional voting rights, an absolute majority of 60 percent will be the first in the market,” Lee said.

Others put it cleaner.

“Aside from the usual IPO, Grab has attracted less scrutiny over Anthony’s control,” said an investment banker who had direct knowledge of the deal.

While commonplace in the technology space, such arrangements are not always popular, as evidenced by reactions to Adam Neumann, the messianic founder of WeWork, and shareholder protests by Zuckerberg, who owns about 60 percent of Facebook’s voting power.

The details of Tan’s control didn’t surprise Grab’s opponent, the Indonesian-based Gojek super app. Joining talks the two companies were suspended at the end of last year before Grab began examining the merger of Spac, and people close to the talks said Tan had called for indefinite control as “chief executive for life.” Grab has denied the reports.

A longtime Grab investor said Tan, who comes from one of Malaysia’s wealthiest families, “needs a high level of power” to negotiate a seat at the table linked to the turbulent world of family conglomerates, policies and regulations in the region.

“The issue is Southeast Asia in itself, not a homogeneous market. . . It’s a collection of different markets with their own set of regulatory considerations, ”said Lawrence Loh, director of the Center for Governance and Sustainability at the National University of Singapore.

In his presentation, Grab explained a number of risks, including an investigation into possible violations of anti-corruption laws related to operations in a country. The company reported potential violations to the DoJ, but declined to comment on them when it contacted the Financial Times.

Nirgunan Tiruchelvam, head of equity research in the Tellimer Group’s consumer sector, is responsible for justifying the dichotomy between ownership and voting shares and proving that it is in the interests of shareholders.

“If the disproportionate share of the vote would be beneficial to shareholders and argue for added value for the company’s further direction, potential shareholders would be pleased.”

Key shareholders have also been diluted by voting power through a dual-class share structure – similar to Facebook. SoftBank, Grab’s largest shareholder, has a 18.6% stake, which will return to 7.6% of the voting power. Uber’s 14.3 percent stake is 5.8%, and Didi Chuxing’s is 7.5%, just 3.1%.

“We’re happy with liquidity right now, but we want to see real progress towards profitability in the longer term,” one investor said.

That is still a few years away. Grab has lost money every year since its inception in 2012 as it faces other well-funded competitors. The accumulated losses were valued at $ 10 billion at the end of 2020. Last year it was a net loss of $ 2.7 billion against a net income of $ 1.6 billion and is not expected to equalize until 2023.

The chart of net loss columns ($ bn) that appear in full grab is not yet profitable

In addition, Grab has not said whether he will appoint an independent director of the board, and his archive does not say what controls and balances are put in place for Tan. No information has been provided on the succession or inheritance of Tan’s shares.

“Further details will be provided in the F-4 registration document to be filed with the SEC [the US Securities and Exchange Commission], and to comply with this regulatory process, we will no longer be able to share until the F-4 is completed, ”Grab said in a statement.

Jeffrey Seah, a partner at venture capital firm Quest Ventures in Singapore, said: “While it has rights supervisors, it has kept its management team intact. [type of] check and balance “.

But the oversight shares taken by Tan Hooi Ling’s founders and President Ming Maa will also benefit Tan’s property, according to the deed that will be introduced at the time of the merger.

So far, Grab’s reputable investors seem happy with Tan. Funds investing in the deal include BlackRock, T Rowe Price, Fidelity, Janus Henderson, Abu Dhabi’s Mubadala, Singapore’s Temas, Malaysia’s Permodalan Nasional Berhad Fund and numerous wealthy family offices in Indonesia.

The test will come when Grab enters the Nasdaq, Loh said. The agreement has been approved by the Grab and Altimeter growth committees, and could be closed in July.

“The moment of truth will be when we discover the price listed and when it is actually traded…. If there are concerns, all investors will probably get a discount,” he added.

mercedes.ruehl@ft.com and stefania.palma@ft.com



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