MUFG Bank To Invest Over $700m In Singapore’s Ride-Hailer Grab
The two companies will form a collaboration aimed at further expansion in Southeast Asia, providing innovative services through smartphone apps, such as lending and insurance.
The deal will be publicly announced shortly by MUFG and Grab, said the people familiar with the matter. MUFG will complete its investment in the ride-hailing business by mid-year, taking a share of several per cent. SoftBank Group is a major shareholder in Grab, but MUFG will own the most significant slice among the financial institutions that have invested in it.
Worth an estimated $14 billion, Grab is one of the largest unicorns in Southeast Asia or unlisted startups valued at more than USD 1 billion.
Grab was founded in 2012 and began by doing business in Malaysia. After then, it has expanded into new sectors and business areas, including food delivery and financial services. In early 2018, it purchased Uber’ Southeast Asian business. The company now operates in eight countries across Southeast Asia, including Indonesia and Thailand. Grab has over 170 million users, based on the amount of app downloads.
In exchange for its investment, MUFG, one of Japan’s biggest banks, will gain assistance in developing a “super app” from which it will be able to deliver customers a variety of everyday services. MUFG will supervise the app’s personal loans and insurance services, while Grab will make use of its customer preferences info. For example, the partners will use the data to offer loans targeted to specific customer needs.
Grab already provides payment services, but to handle financial products such as customer loans, it wants the ability to test the creditworthiness of lenders and their eligibility to obtain loans. MUFG will lend its experience in these fields and help secure regulatory clearance with financial authorities in various Asian countries.
MUFG considers Southeast Asia as a region with high potential for growth. In 2013, the Japanese bank acquired Thailand’s Bank of Ayudhya Public Co., better known as Krungsri, and has invested in local banks in Vietnam, the Philippines and elsewhere. It purchased Indonesia’s Bank Danamon last year, transforming the mid-tier lender into a subsidiary.
Many Southeast Asians continue to remain unbanked. Barely 50 per cent of Indonesians have bank accounts, while the average in countries such as Vietnam and the Philippines is close to 30 per cent. It’s nearly 100 per cent in Japan.
MUFG plans to broaden its knowledge of digital offerings by partnering with Grab, which it hopes to use to draw new customers in a region with a growing middle class.
MUFG is also interested in Grab’s powerful artificial intelligence technology and data analysis skills, qualities that would be beneficial as MUFG competes in its home market further with online banks and IT startups.
The megabank and Grab are joining other financial heavyweights and tech companies who have collaborated to collect consumer data. Apple and Goldman Sachs joined together to launch a credit card last year, while Google plans to partner with Citigroup to roll out a checking account service.