South East Asia’s largest ride-hailing company Grab Holdings has said it plans to merge with US-based Altimeter Growth Capital in a deal that would value it at nearly 40 billion dollars in preparation for an initial public offering in the US.

Grab’s agreement to list via a special purpose acquisition company (SPAC) – a shell company set up with the aim of raising money through an IPO to acquire another company – has drawn four billion dollars (£2.9 billion) in private investment in public equity from a group of investors including Fidelity International and Singapore’s Temasek Holdings.

That would make it the largest SPAC merger ever, more than double the current record-holder United Wholesale Mortgage’s 16 billion dollar (£11.6 billion) merger in January.

At closing, the combined company is expected to receive approximately 4.5 billion dollars (£3.3 billion) in cash proceeds and will be valued at about 39.6 billion dollars (£28.8 billion), according to a statement.

The merger will make Grab the most valuable South East Asian company to list shares in the US.

Under the deal, Altimeter’s shares will be subject to a three-year lock-up period in a show of its commitment to Grab.

“They’re joining our journey for the long run, together with an incredible day one cap table of renowned institutional investors and sovereign wealth funds,” Grab chief executive Anthony Tan said in a statement.

Brad Gerstner, founder and chief executive of Altimeter, described Grab as one of the world’s largest and fastest-growing companies.

“We are thrilled that Grab selected Altimeter Capital Markets as their partner to go public and even more excited to become sizable long-term owners in this innovative, mission driven company,” Mr Gerstner said in a statement.

SPAC mergers have gained popularity over the last year as they allow companies to go public and gain capital more cheaply and more quickly than using a conventional IPO process.

When the SPAC acquires a target, the acquired company takes the SPAC’s spot on an exchange and typically gets a new stock ticker.

A traditional IPO requires a company to hire an investment bank, produce mountains of materials for investors to scrutinise, and eventually talk to potential investors at roadshows before they can go public.

Singapore-based Grab, founded by Mr Tan and Tan Hooi Ling in 2012, began as a ride-hailing company but later expanded into offering other services such as deliveries of groceries and takeaway meals, digital payments and financial services.

The company was last valued at more than 14 billion dollars (£10.2 billion) after a 1.5 billion dollar (£1.1 billion) cash injection from Japan’s SoftBank in 2019.

The SPAC company, Altimeter Growth Capital, is a so-called blank-cheque company sponsored by Altimeter Capital Management, a technology-focused investment firm based in California.

According to an SEC filing, Altimeter Growth Capital was incorporated in August 2020.