Chinese e-commerce giant Alibaba Group (BABA) - Get Report is considering investing as much as $3 billion into Southeast Asian ride-hailing giant Grab Holdings, acquiring some of the stock currently owned by Uber Technologies (UBER) - Get Report.
Bloomberg reported Monday that Alibaba was in discussions as the potential lead investor in the ride-hailing giant, which like similar companies has seen revenue take a hit amid the coronavirus pandemic.
China’s biggest conglomeratem co-founded by billionaire investor Jack Ma, has so far steered away from the ride-hailing business, though a potential tie-up with Grab gives it access to data on millions of users in eight countries, a growing delivery fleet as well as a stake in digital wallet and financial services, according to Bloomberg.
As part of the potential deal, Alibaba would scoop up $3 billion of stock currently owned by Uber, which itself ended up with a piece of Grab in 2018 as part of truce between Grab and regional rival Gojek, in which Uber agreed to exit Southeast Asia.
The funding - approximately one-fifth of Grab’s last known valuation of $14 billion, according to Bloomberg - comes amid growing questions over all ride-sharing operators' ability to continue to making money amid the Covid-19 pandemic.
It also comes as Grab creeps closer to being on the hook for more than $2 billion it will owe to San Francisco-based Uber if it doesn’t manage to go public by mid-2023, part of the 2018 coordinated exit deal, Bloomberg said.
SoftBank is reportedly at the center of the discussions, according to Bloomberg. The Japanese investment giant has used its position as a major shareholder to push Uber to unload stakes in Grab, Didi Chuxing of China and Russia’s Yandex.
SoftBank is also pushing Grab to make peace with Gojek. Gojek, which is reportedly valued at $10 billion and has raised capital from both Facebook (FB) - Get Report and PayPal Holdings (PYPL) - Get Report, is Grab's arch-rival. The two also compete in food delivery and financial services.
JPMorgan Chase is advising Grab, while Goldman Sachs is advising Gojek, other people familiar with the matter told Bloomberg.
Alibaba's American depositary receipts were up 1.33% at $275.03 in trading on Monday. Shares of Uber were up 1.43% at $37.51.