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Grab is talking to Ant Financial and PayPal about spinning out its financial services business

Grab, the $16 billion-valued ride-hailing firm that acquired Ubers Southeast Asia business last year, is in talks with Alibabas Ant Financial and PayPal as it considers spinning out of its financial services unit to double down on its non-transportation business, TechCrunch has learned.
The seven-year-old companys coming-of-age moment was a deal to buy Ubers regional business last year, but it hasnt enjoyed the total monopoly many foresaw. Instead, it is faced with a growing challenge from rival Go-Jek, a $10 billion company backed by Google, Tencent and others, which is expanding across the region from Indonesia. In response, Grab is placing an increased focus on financial services as it seeks to become the everyday app for consumers in Southeast Asia, where digital spending is expected to triple by 2025.
Grab Financial Group which covers the GrabPay service and ventures that include insurance and loans would operate independently of the core Grab business if spun out, but could start its new life with some notable allies. Grab is in early discussions with Ant Financial, Alibabas financial services business, and global payments firm PayPal over potential strategic investments, two sources with knowledge of talks told TechCrunch.
Grab has been heavily linked with an investment from Alibaba having held discussions in the past but backing Grab Financial might make more sense for the Chinese firm since it aligns with Ant Financials push into Southeast Asia, which has seen investments in the Philippines, Thailand and Indonesia among other markets.
A spin-out could happen in the coming months, according to one of the sources.
Deal Street Asia previously reported that Ant, which operates Alibabas hugely successful Alipay service and other financial ventures, would invest in Grabs financial services unit.
We dont comment on rumors or speculation, a PayPal spokesperson told TechCrunch.
We dont comment on market rumors and speculation, a Grab spokesperson told TechCrunch.
A spokesperson for Ant Financial declined to comment.
The move would cap a busy recent period for Grab, which earlier this month announced a $1.48 billion investment from SoftBanks Vision Fund, a deal that TechCrunch first reported on in December. That financing took Grabs ongoing Series H round to $4.5 billion. We previously reported that it could close out at around $5 billion and Grab has confirmed that it is still raising capital for the round. Its important to note that the spin-out of Grab Financial Services would not be directly related to the round.
Headed by long-time Grab executive Reuben Lai, Grab Financial Services is as the name suggests focused on building out fintech and payment services for the ride-hailing firm as part of its super app strategy. Thats designed to take Grab from merely being a transportation app, in the purest sense of what Uber and its rivals began as, and develop it into a daily app for Southeast Asias 600 million-plus consumers.
Beyond the obvious areas like transportation and food delivery, Grab has added its own payment service in addition to rides, GrabPay covers online and offline merchants in selected markets in Southeast Asia and teamed up with partners to add SME loans, insurance, cross-border transfers and more. Internally, Grab sees its financial platform as glue that can keep its core app sticky for users whilst helping build new revenue streams and business lines beyond transportation which, as we all know, is a highly capital intensive industry.
This year is all about doubling down on financial services and really executing on that, Lai told TechCrunch in an interviewon the sidelines of the Money2020 event in Singapore this month, where Grab announced new insurance and loans products. Right now, many of those financial products are limited to Singapore, but Lai said Grab plans to offer its suite of financial services across the region over time.
Grab is talking to Ant Financial and PayPal about spinning out its financial services business
Reuben Lai, senior managing director at Grab Financial Group, speaks during the Money20/20 Asia Conference in Singapore, on Tuesday, March 19, 2019. [Photographer: Nicky Loh/Bloomberg/Getty Images]
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