Beyond FOMO: Why Grab should race to an IPO fast

Ten years have passed between Uber’s founding and its listing on the New York Stock Exchange.

Can Grab manage the same feat in nine?

It’s certainly possible if reports are correct that the Singapore-headquartered tech giant is exploring a listing in the US this year.

The Reuters report that broke the story cited “robust investor appetite for IPOs” as a motivating factor.

Indeed, public markets are awash with cash. Three of the 10 largest US tech company initial public offerings of all time took place in 2020. These IPOs – Snowflake, Airbnb, and DoorDash – raised a total of US$11 billion. Not bad for a year that saw unprecedented economic disruption due to the pandemic.

Crucially, there has been particular interest in emerging market technology companies, as seen from the performance of the following US-listed companies.

The technology-heavy Nasdaq index is up by 43% year on year, while the S&P 500 is up by a more modest 15%.

Grab and its investors are undoubtedly lured by this market euphoria, which could continue well into 2021 if major central banks maintain their loose monetary policies of zero interest rates and purchasing of financial assets.

Tech in Asia reached out to Grab for comment but has not heard back from the company as of publication time.

Dash for cash

A successful IPO creates more than just paper billionaires and bragging rights. Indeed, the whole point of going public is to raise funds from a larger pool of investors.

This may have been overlooked in recent years. The growing availability of private capital has led to many companies being able to stay private for longer, resulting in much hand-wringing over a decline in listed companies.

What to watch out for