Grab CEO says coronavirus ‘single biggest crisis’ in company’s history
- Anthony Tan, co-founder and chief executive of Grab, plans to make ‘necessary operational adjustments’ to weather the crisis
- Southeast Asia’s most valuable start-up has been expanding beyond ride-hailing into food delivery and financial services
Grab chief executive Anthony Tan said the coronavirus is creating significant challenges for the Southeast Asian ride-hailing start-up that will require “tough decisions” about cutting costs and managing capital.
“Covid-19 is the single biggest crisis to affect Grab in the eight years of our existence,” Tan said in a message to investors and partners on Monday. “It has had an unprecedented impact on our operations, our business and the livelihoods of our partners.”
The Singapore-based company is the most valuable start-up in Southeast Asia, as it has expanded beyond ride-hailing into food delivery and other services. In February, Grab raised more than US$850 million to fund its push into financial services in the region.
But demand for ride-hailing services has collapsed, as many cities across Southeast Asia are on lockdown.
Grab has been trying to offset some of that shortfall with food delivery, which is experiencing a surge in demand as people stay at home.
“There will be tough decisions and trade-offs to make, as we continue to evaluate its impact on our business,” Tan said. “We will right-size our costs, manage our capital efficiently and make the necessary operational adjustments in order to weather the storm and carve out a path to profitability.”
Grab’s primary backer has been Japanese conglomerate SoftBank Group Corp, which has taken repeated blows since the implosion of WeWork’s initial public offering last year.
Masayoshi Son, founder and chief executive of SoftBank, has been among the biggest backers of ride-hailing companies, including Uber Technologies, Didi Chuxing and Grab.
How Grab’s CEO built Southeast Asia’s most valuable tech unicorn
Last week, Softbank forecast a record 1.35 trillion yen (US$12.5 billion) operating loss for the fiscal year ended in March.
Uber, which sold its Southeast Asian business to Grab in early 2018 in return for a stake, said last week it will write down about US$2 billion in investments after the coronavirus pandemic upended the ride-hailing business.
San Francisco-based Uber said the writedown of its minority investments will range from US$1.9 billion to US$2.2 billion. Uber holds shares in various ride-hailing and food delivery businesses around the world. The company valued holdings in Didi Chuxing and Grab at a combined US$10.3 billion at the end of last year. It did not identify which investments were driving the charge.
