SINGAPORE -- Southeast Asia's largest ride-hailing operator Grab is on track to raise another $1 billion from investors by the end of this year, in what is to be a fresh bout of fundraising for the region's biggest "unicorn," or billion-dollar startup, the Nikkei Asian Review learned Friday.
Six-year-old Grab has succeeded in attracting more than $6 billion in total funding, led by Japan's SoftBank Group and Chinese ride-hailing company Didi Chuxing. With the new round of fundraising, Grab will have raised $3 billion this year alone, including $1 billion from Toyota Motor.
SoftBank will likely be the key investor in the fresh fundraising round, pouring in $500 million, Reuters reported, citing unnamed sources. Grab declined to comment on the report.
Grab earlier said it would spend the $2 billion that it already raised this year for business development in Indonesia, the region's largest economy. With the fresh $1 billion, the company is expected to continue to invest in that market, along with technological development and talent sourcing.
For SoftBank, Grab is one of the key ride-hailing businesses in the group, along with Uber Technologies, China’s Didi Chuxing and India's Ola. Highlighted in Thursday's announcement of a mobility service joint venture with Toyota, tightening ties with the ride-hailing business is apparently becoming more important for SoftBank.
Founded in 2012 in Malaysia, Grab has raised some $6 billion so far. Apart from SoftBank and Toyota, investors include Didi and China's Ping An Capital. According to CB Insights, Grab is the biggest unicorn in Southeast Asia, valued at $11 billion. Grab's total app downloads exceed 100 million.
This year, Grab acquired Uber's Southeast Asian business in exchange for a stake in itself, which means it now controls major market shares in eight countries in the region.
Grab is now transforming itself from a ride-hailing app into what it calls an "everyday superapp" -- a platform for digital consumer services. Under this strategy, Grab is expanding its service lineup as well as the types of offerings through external partnerships.
Its non-ride-hailing services include food delivery and e-payments. It will also start online health care service in a partnership with Ping An Good Doctor of China in early 2019.
But at the same time Grab is facing new competition. Although its longtime rival Uber exited from the region, Indonesia-based Go-Jek, whose investors include China's Tencent Holdings and Google, started overseas expansion this year, starting with the Vietnamese market. Go-Jek has already said it will also enter Thailand, Singapore and the Philippines.
Technology development, such as artificial intelligence that can estimate traffic congestion and generate more efficient driver-rider matching, is increasingly important for Grab to differentiate itself from its rivals. Developing this capability requires a lot of money.
The "superapp" transformation entails adding new services, requiring more investment by Grab for non-ride-hailing areas. The company may need funds for promotion in businesses that face intense competition.
Grab needs more investment to grow. The company's successful fundraising indicates that investors see its huge growth potential.