My Thoughts on Grab's $1.5B Convertible Note Deal

A Strategic Masterstroke if executed well

What Happened Today:

Earlier today, Grab announced a $1.5B Zero-Coupon Convertible Note offering due in 2030.

This was an upsize, compared to the previous days’ announcement of a planned $1.25B offering.

Note Details:

• Zero-Coupon

• Convertible Senior Notes

• Matures on 15 June 2030

• Conversion Price of $6.55

  • ~40% Premium to Yesterday’s Closing Price

• Max Dilution of 5.4% (228,937,800 new shares IF all note holders convert)

• Optional Redemption:

  • Grab can redeem the notes if its stock trades OVER 130% of Conversion Price for 20/30 trading days from June 21, 2028 onwards

• Cleanup Redemption:

  • If <10% of the issuance remains outstanding

• Investor Put:

  • Holders can demand a cash repurchase on June 15, 2028 (at 100% Principal) or upon a “fundamental change” event

Use of Funds:

“Grab intends to use the net proceeds from the Notes Offering (i) for general corporate purposes, (ii) to optimize strategic flexibility, which may include potential acquisitions, while continuing to maintain a high bar for such transactions, (iii) for the Concurrent Repurchase (as described below), in relation to which it expects to fully utilize the $274 million authorized but unused amount under its $500 million share repurchase program announced in February 2024, and (iv) for any other share repurchases that may be authorized by its board of directors.”

In the following paragraphs, I discuss my thoughts on Grab’s upsized deal, why this deal makes sense, risks and concerns, and the 3 key things I will be watching moving forward.