Grab, the south-east Asian ride-hailing and food delivery app, has raised $300m from investors for its financial services arm, valuing the three-year-old unit at $3bn.
Hanwha Asset Management led the round, with other investors including GGV and Flourish Ventures.
Grab Financial Group was spun out of Grab in 2018 and offers payments, credit and insurance. It has been fundraising since early last year.
In common with its rivals, Grab, which is backed by SoftBank and Mitsubishi UFJ Financial Group, has grown from its initial ride-hailing and delivery business into building a “super app” that offers a range of services including banking.
A November 2020 report from Google, Temasek and Bain suggested that financial services revenues in the region could reach $60bn by 2025.
Reuben Lai, who heads Grab’s financial services unit, told the Financial Times in an interview that it had had a “tough year”.
“At the start of  nobody knew how the year would pan out,” he said, referring to the pandemic’s early hit to Grab’s business. “[This fundraising] validates the business we have been slowly building over the past couple of years.”
The unit’s revenues, which also includes wealth management, grew 40 per cent in 2020 compared with a year earlier.
“Most fintechs were very nervous going into Covid-19,” Mr Lai said, especially with lending practises that were untested in a crisis. Instead there was a huge acceleration in digital financial services and Grab’s lending models were “proven right”, he added. The group does not publish its non-performing loan rate but it was “within” regular retail levels.
Grab Financial, which is not profitable, will use the funds to set up its digital bank in Singapore, hire talent as well as continue to grow its business including via partnerships and acquisitions. Last month it launched a buy-now, pay-later platform.
Mr Lai said Grab Financial had been approached by a number of special purpose acquisition vehicles in the past year but that this was not the right path for the group for now. Blank cheque companies allow a fast route to public markets and a large number are targeting Asian technology firms.
Grab’s new financial firepower comes as it faces an increasingly competitive landscape in south-east Asia. Not only is it up against rival Gojek and its GoPay platform in multiple markets, it has also had to contend with Nasdaq-listed Sea, a $100bn gaming and ecommerce company that is pushing aggressively into financial services in the region.
Jixun Foo, the managing partner of global venture capital firm GGV’s China office, said the fundraising will help Grab Financial be more independent, as well as give them room to grow. “We are a big believer in financial services in south-east Asia in particular,” he said, adding it was “not a winner-take-all market”.
The fundraising came just days after reports that Gojek was pursuing a merger with Indonesian ecommerce group Tokopedia to form an $18bn company. Gojek had also held merger talks with Grab but the two rivals reached an impasse late last year. Grab declined to comment on the Gojek discussions.
“It is not a coincidence that this news has come hot on the heels of the Gojek and Tokopedia merger talks,” said one person with direct knowledge of the deal.