Grab, the prominent ride-hailing and food delivery company in Singapore, has made a significant move in the market by signing an agreement for its car rental unit, Grab Rentals, to acquire Trans-cab, the city-state’s third-largest taxi operator. This acquisition marks Grab’s first local competitor buyout and is expected to be finalized in the fourth quarter of 2023. The deal includes Trans-cab’s taxi and car rental business, maintenance workshops, and fuel pump operations. Founded in 2003, Trans-cab started with a fleet of 50 taxis and has grown to operate more than 2,500 vehicles.
While the financial terms of the acquisition have not been disclosed officially, a report by The Straits Times estimates the deal’s size to be around $75 million. The primary motivation behind this move is to address the driver shortage issue in Singapore, which has led to rising fares due to an imbalance in demand and supply.
By acquiring Trans-cab, Grab aims to expand its pool of drivers, ensuring faster and more reliable ride availability for its passengers. Yee Wee Tang, the managing director of Grab Singapore, stated that boosting the number of drivers and enhancing their operational efficiency will improve Grab’s service for passengers.
The acquisition will also bring benefits to Trans-cab drivers as they join the Grab platform. They will receive similar advantages provided to existing Grab drivers, including free coverage through Grab’s Personal Accident Insurance and access to GrabAcademy, a program that offers skill development in areas like data analytics and digital marketing. Additionally, drivers will have access to rewards through loyalty programs.
To further digitize the business, Grab plans to integrate its driver application into Trans-cab’s mobile display units. This integration will enable Trans-cab taxi drivers to manage their earnings and receive bookings from both Grab’s platform and Trans-cab’s existing call center.
Consolidation through mergers and acquisitions is becoming increasingly common in the tech industry, driven by factors like tight private capital and a slow initial public offering market due to economic downturns affected by growing inflations and high-interest rate headwinds.
The Grab-Trans-cab acquisition follows a recent development in Singapore’s ride-hailing sector, where SMRT’s ride-hailing operator, Strides Taxi, merged with Premier Taxis to become the country’s second-largest taxi operator, bringing together a combined fleet of approximately 2,500 taxis. ComfortDelgro currently holds about 60% of the market share in Singapore, boasting a fleet of around 8,800 taxis.