Grab’s new wealth management product taps Temasek-tied funds

A Grab motorcycle rider picking up a passenger. Photo by Afif Kusuma on UnsplashA Grab motorcycle rider picking up a passenger. Photo by Afif Kusuma on Unsplash

This item originally ran on finews.asia

Superapp Grab has launched a new low-minimum wealth management product, tapping on funds from one of Singapore state-owned investment company Temasek Holdings’ subsidiaries.

The ride-hailing, fintech and food and package delivery superapp has launched an investment product in Singapore called Earn+, in conjunction with rebranding its fintech platform as GrabFin, Grab said in a press release Monday. Grab has previously said it plans to launch its Singapore digital bank to the public later this year.

Earn+ is in part of the GrabFin strategy of providing financial products targeting its app’s users, particularly aimed toward the underbanked. The product will invest in low-risk mutual funds managed by Fullerton Fund Management and UOB Asset Management, the release said. Fullerton Fund Management is a wholly owned subsidiary of Singapore’s state-owned investment company Temasek Holdings. Temasek entities also held 10 million Grab shares as of the end of March, although in February, it held around 34.7 million shares, according to filings to U.S. securities regulators.

Low minimum

The Earn+ product, starting off only in Singapore, is considered low-risk, with a projected yield of 2 percent to 2.5 percent a year, with a minimum investment of S$1 and no maximum, Grab said. Singapore banks typically pay less than 1 percent on their savings accounts, while the Central Provident Fund (CPF), the city-state’s mandatory retirement savings program, offers a minimum of 2.5 percent on its ordinary account.

“Earn+ provides our users with access to low-risk, investment-grade bond portfolios, which were previously only available to institutional investors,” Wenbin Wong, head of GrabFin Singapore, said in the statement.

Grab did not share projections for take-up of the Earn+ product. However, in its first quarter earnings statement, the company said its financial services segment had overall total payments volume of US$3.6 billion, including payments between Grab entities, and its monthly transacting users grew 18 percent in the first quarter from the year-ago quarter.

Potential for expansion

While the new wealth management offering is currently only available in Singapore, with a population of around 5.7 million, the potential for a similar offering in Grab’s other Southeast Asian markets is likely significant, with a total regional population of around 681 million. Grab has touted its ecosystem, or “flywheel,” of being able to offer services not only to consumers, but its merchants and riders as well as its ability to entice its users to take up more than one service.

Southeast Asia still has a large unbanked and underbanked population. Of the around 400 million adults in Southeast Asia, around 198 million are unbanked — or don’t have a bank account — while another 98 million are underbanked, with a bank account, but without access to credit, investments and insurance, according to the e-Conomy SEA 2019 report published by Google, Temasek and Bain & Co. in October 2019, prior to the start of the Covid-19 pandemic.

In its first quarter results released last week, Grab said it would use the same “technology stack” for its digital banks in the region. The new brand GrabFin, which will first be launched in Singapore and Malaysia, will eventually be used in the company’s other Southeast Asian markets, the release said.