Southeast Asian ride-hailing companies Grab Taxi Pte Ltd. and Gojek are reportedly in merger talks on a deal being pushed by SoftBank Group Corp. founder Masayoshi Son.

Grab, which is partially owned by Uber Technologies Inc. following Uber’s exit from the Southeast Asian market in 2018, is the region’s leading ride-hailing company. Gojek (formally PT Aplikasi Karya Anak Bangsa), an Indonesian company with operations also in Singapore, Thailand, Vietnam and the Philippines, is Grab’s largest rival.

Both companies share a similar lineup of investors and they read like a Who’s Who in terms of major Silicon Valley, Japanese and Chinese companies. SoftBank, Alibaba, Tencent, Mitsubishi, PayPal, Google, Facebook and Visa to name a few — some of which are investors in both companies.

Reports that SoftBank was pushing for a merger of the two companies surfaced in March before COVID-19 seriously affected the market. It was said at the time that talks between the two competitors had been ongoing for two years but there was no urgency in the talks.

That SoftBank and Son are pushing a potential merger comes as no surprise given SoftBank’s ongoing attempts to sell and consolidate its investments following its WeWork debacle last year. SoftBank announced in March that it intended to sell off $41 billion in assets to help pay down debts. The most notable divestment came Sept. 13 with the confirmed sale of Arm Holdings Ltd. to Nvidia Corp. in a $40 billion deal.

A merger of the two leading ride-hailing companies may make sense on paper, if likely to face regulatory push back in countries including Singapore and the Philippines, but the potential merger is not guaranteed. The complicating factor is Alibaba Group Holdings Ltd. SoftBank is a major investor in Alibaba, though not with a controlling stake.

According to The Business Times, Alibaba is in talks to invest $3 billion into Grab. That may make a potential merger complicated in terms of antitrust considerations. “If a Grab-Gojek merger was not difficult enough, the entrance of Alibaba and its associated business will increase regulatory scrutiny,” Justin Tang, director and head of Asian research at advisory group United First Partners, told Business Times.

Bloomberg reported that the Alibaba investment could also result in a tie-up between Grab and Lazada Group, Southeast Asia’s version of Amazon.com Inc. that Alibaba holds a majority stake in. That raises even more competition issues given that Lazada is the e-commerce market leader in many Southeast Asian countries.

Should Alibaba invest $3 billion in Grab, it will take the amount the company has raised to $13.1 billion. All companies with venture capital have to deliver an exit at some point, whether through an initial public offering or a private sale, and with Grab there is a catch: Under the terms of the 2018 Uber deal, it has to do so by mid-2023 or pay Uber $2 billion. Given that the clock is ticking for Grab, a merger with Gojek ahead of an IPO makes even more sense.

Photo: Dadbod1234/Wikimedia Commons