Alibaba is in talks to invest $3B in Grab

Alibaba Group Holding ltd. is in talks to invest $3 billion into Southeast Asian ride-hailing giant Grab Holdings inc., according to people familiar with the matter.

The Chinese e-commerce giant, a sole investor in the round, will spend a portion of the funds to acquire some of the Grab stock held by Uber Technologies inc., one of the people said, asking not to be named as the discussions are private. The deal may represent one of Alibaba’s biggest bets on Southeast Asia since its first investment in lazada in 2016. China’s largest corporation has previously had limited forays in ridehailing but a potential tie-up with Grab gives it access to data on millions of users in eight countries, a growing delivery fleet as well as a stake in digital wallet and financial services.

The funding—about a fifth of Grab’s last known valuation of $14 billion— comes amid growing questions over the company’s ability to live up to its lofty price tag as it grapples with the impact of the coronavirus pandemic. Chief Executive Officer Anthony Tan said the company is facing its “single biggest crisis,” while co-founder Tan Hooi ling warned in May of a “long winter.” Existing investors have also been frustrated by what they see as value-destroying competition with Grab’s regional archrival Gojek.

The world’s biggest ride-hailing companies have waged years of costly battles in each others’ territories before they agreed to stay out of each others’ core markets. The truce left Uber with considerable stakes in its rivals worth more than $9 billion, including a 23.2-percent stake in Grab at the end of 2018. Under the terms of a deal that Uber struck to exit Southeast Asia, Grab is on the hook for more than $2 billion to the San Franciscobased company if it doesn’t go public by mid-2023.