Amid swirling rumors of a merger with Gojek, Southeast Asia’s most valuable start-up, and the Indonesian super-app player, Grab has announced that it has raised $856 million more in funding from Japan’s Mitsubishi UFJ Financial Group and TIS to bankroll its expansion into financial services in the region.
The sum includes US$706 million from MUFG, Japan’s largest bank, and US$150 million from TIS, a provider of data center and cloud services, according to joint statements from the companies.
Backed by the SoftBank Group, Grab has been expanding into financial services, consolidating on its ride-hailing, food delivery, and e-wallet facilities in an effort to become a one-stop-shop for on-demand services in Southeast Asia. Tie-ups between tech start-ups and banks are becoming increasingly prevalent in the region, where widespread smartphone use promises greater access to clients who have traditionally been neglected by the financial system.
Grab will co-develop financial products and solutions with the two investors, President Ming Maa said in a statement. The investments demonstrate “their confidence in Grab’s super-app strategy and our ability to build a sustainable long-term business,” he said.
For the Tokyo-based MUFG, the alliance will strengthen its roots in Southeast Asia, where it has been buying large stakes in banks to make up for weak growth opportunities at home.
“MUFG has been developing business in Southeast Asia by building a platform centered on our partner banks. We are excited to be able to provide customers with next-generation financial services by combining Grab’s advanced technologies and data management expertise with our financial knowledge and know-how,” said Hironori Kamezawa, Deputy President, Group COO & Group CDTO, MUFG, in a statement. “We believe that this alliance will also generate additional momentum for our ongoing digital transformation of MUFG.”
The funding comes amid increasing rumors of a potential merger with Gojek, which has been repeatedly denying any such plans. 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, declined to comment on the rumors and speculation.
But if sources close to the situation are to be believed, serious talks about a merger have been going on for a few months now, with Grab president Ming Maa and Gojek chief executive Andre Soelistyo said to have attended the latest discussion in early February.
However, it would be interesting to see who will rule the roost in the combined entity. Grab, being the bigger player is better placed to assume control of the merger, but reportedly, Gojek does not want its operations to be absorbed into Grab. Meanwhile, Grab has reportedly told its major investors that Gojek wants a deal where its shareholders would own half of the companies’ combined Indonesian operations. Grab, however, is said to be seeking control of the combined entity, including the Indonesian operations.
It would be interesting to see if Gojek succumbs to the pressure amid increasing difficulties in attracting investors of its own.