SINGAPORE -- Ride-hailing app Grab on Thursday said it has raised an additional $1 billion from venture capital groups including units of China's Ping An Insurance Group and South Korea's internet giant Naver, in a bid to tackle unfinished challenges after its acquisition of Uber Technologies' regional business.
The new investment comes after June's $1 billion investment from Toyota Motor. Grab's latest round of fund raising has reached a total $2 billion, the Singapore-based company said.
Although the acquisition of Uber's business in Southeast Asia in March made Grab a dominant player in most markets in the region, it still faces challenges from newcomers and existing rivals, such as Indonesia's Go-Jek. Grab is willing to continue investing in new technologies and services, and had become increasingly aggressive to tap new investors in the wake of the acquisition.
The latest fund-raising includes Ping An Capital, a unit of the Chinese insurance company, as well as Mirae Asset-Naver Asia Growth Fund, a joint investment fund set up by the South Korean asset manager and the country's biggest internet service operator. Prior to Toyota's $1bn investment, Grab had already raised some $4 billion in total from big corporations, including Japan's SoftBank Group. Uber has also taken a stake in Grab in exchange for selling the regional business.
According to Mirae Asset, this is the first investment project under its joint fund with Naver. Mirae Asset told the Nikkei Asian Review that the objective is "pure investment," adding that the fund is looking for promising startups in Southeast Asia and India.
Grab said on Thursday it would use much of the proceeds for investment in Indonesia, the biggest economy in Southeast Asia, and the home of Go-Jek, Grab's biggest rival in the region. As its first expansion into the neighboring Southeast Asia market, Go-Jek is set to officially launch its services in Vietnam in September through its local partner Go-Viet. As Grab also has a focus on Southeast Asian markets, it is crucial to counter Go-Jek now.
The countermeasures largely focus on technology and diversified services. In July Grab said it would become an "everyday superapp" by adding more consumer services to its menu, in a move to counter Go-Jek and other new ride-hailing groups. Diversification means Grab needs investment in new areas of technology development. It will also need more funds to hire engineering talent, such as experts in artificial intelligence.
To counter its competitors, Grab is expected to create more incentives to help it acquire more drivers and encourage them to take more rides, as well as adding promotions for riders, which Grab reduced after it acquired Uber.
Go-Jek has made its first overseas foray into the Vietnamese market, testing its motorbike hailing service in July through its partner Go-Viet. Industry insiders said that, to ensure a smooth takeoff, Go-Viet has hired former executives of Uber, which has quit the region. Go-Viet has started to offer incentives to secure drivers, including ex-Uber drivers, such as free uniforms and fare support of $1.27 per ride.
In addition to strengthening capital reserves, the latest investment could open the way for Grab to collaborate with the new investors, such as on drivers' insurance services with Ping An, and internet services with Naver. Grab and Naver have areas of common interest such as autonomous driving. Grab's spokesperson, however, said the company had "nothing to share" about potential business collaboration with the investors.
Grab President Ming Maa said in a statement: "We have seen overwhelming interest from global strategic investors and partners who are keen to partner with us to capture the region's booming growth."
Nikkei staff writer Kim Jaewon contributed to this report.