Wednesday, May 18, 2022 at Grab Holdings Ltd. headquarters in Singapore. Grab Holdings Ltd. is scheduled to report its results on May 19th. Photographer: Bryan van der Beek/Bloomberg via Getty Images
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grab acquires Singapore-based buy now, pay later platform Atome Financial, aiming to expand its consumer finance business.
The company announced plans to acquire an initial 60% controlling interest in Atome for $1.49 billion in cash and to purchase the remaining 40% approximately two years after the initial transaction closes. The two-tier structure was designed in part to “de-risk” the deal from a capital allocation perspective, CFO Peter Ooi told CNBC’s “Squawk Box Asia” on Wednesday.
Following the announcement, Grab shares closed down 3.64% on the Nasdaq market.
The acquisition is part of Grab’s efforts to expand its financial services business beyond its existing services, and the company is betting that Atome can help expand its consumer finance space.
“All of this combined really takes our capabilities to the next level when it comes to financial services,” Ooi added, adding that the deal will be good for the business and will help raise Grab’s 2028 outlook.
Ooi said Atome works with brands such as travel, beauty and e-commerce, giving it access to areas where Grab has a more limited presence.
The deal is expected to close next year, which means Atome’s contribution will become more meaningful later that year and into 2028, he said. Grab expects its financial services division to generate $500 million in adjusted EBITDA by 2028.
Ooi said Grab will retain Atom’s management team, but will allow a period between the two phases to give both companies time to work on potential synergies.
Besides the Atom deal, Ooi cited micro-investments as another potential opportunity in Southeast Asia. He said access to fair credit in Southeast Asia is an area where the company wants to work with regulators.
