When a world-renowned value investor takes a sizeable position in a high-growth technology company, it tends to draw attention—and rightly so. These investors are known for their conservative approach, deep research, and high standards for risk-adjusted returns. So, when Howard Marks, the co-founder of Oaktree Capital Management, made Grab Holdings (NASDAQ: GRAB) one of his firm’s top public equity purchases in Q1 2025, it signaled something significant was unfolding beneath the surface.
Oaktree is synonymous with disciplined, long-term investing. The firm typically avoids speculation and focuses on undervalued, misunderstood, or distressed assets where the downside is protected and the upside is often underappreciated. For a firm with this pedigree to take a meaningful position in a Southeast Asian super app might seem out of step—until you look deeper. In this analysis, we’ll unpack why Grab is more than just another consumer tech company, explore its evolving fundamentals, and break down why the stock might represent a textbook case of asymmetric risk and reward.
Understanding Grab’s Platform and Strategic Position
Grab is far more than a ride-hailing business. It has evolved into a full-fledged super app, a digital ecosystem that offers transportation, food and parcel delivery, financial services, advertising, and even enterprise solutions. Its presence spans across key Southeast Asian markets—Singapore, Malaysia, Indonesia, Thailand, Vietnam, and the Philippines. This regional scale matters: Southeast Asia is home to over 675 million people and is one of the fastest-digitizing economies in the world, with rising smartphone penetration, increasing e-commerce adoption, and a still-large underbanked population.
Currently, Grab commands a leadership position in multiple verticals:
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Mobility: With roughly 70% market share in Southeast Asia, Grab dominates the ride-hailing space. Its closest rival, Gojek, lags both in reach and depth of integration.
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Deliveries: From food and groceries to packages, Grab has carved out a commanding 50–60% share of the regional delivery market, positioning itself as a logistical powerhouse.
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Financial Services: Grab is now venturing aggressively into digital payments, insurance, and consumer lending, particularly targeting the underbanked segments of the population.
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Advertising & Commerce: With over 120 million annual transacting users, Grab is starting to unlock a high-margin advertising business, creating new monetization pathways that mirror Western peers like Uber and DoorDash.
The combination of these services makes Grab a central utility in everyday life for many Southeast Asians. Few companies outside of China have been able to achieve this type of integrated consumer footprint.
A Business That's Maturing Fast
One of the most common critiques of super apps in emerging markets is that they often burn cash, are overly reliant on subsidies, and lack a clear path to profitability. That’s changing for Grab.
In 2024, the company posted 20%+ year-over-year revenue growth (excluding currency fluctuations) and turned profitable on an adjusted EBITDA basis. Even more notably, the company crossed into positive free cash flow territory, a critical inflection point that marks the beginning of financial self-sufficiency.
By Q1 2025, Grab had already raised its full-year EBITDA guidance to nearly $500 million, a meaningful increase over previous expectations. Mobility remains the company’s cash-generating engine, growing at ~15% year-over-year with high contribution margins. Deliveries, growing closer to 18%, is also improving steadily in margin profile. Financial services is still loss-making but continues to scale rapidly with 30–40% segment growth and nearly 50% growth in lending products alone.
This dynamic—improving profitability without compromising growth—is a rare combination and one that’s particularly attractive to investors like Oaktree, who look for margin expansion as a key lever of value creation.
The Valuation Setup: A Classic Asymmetric Bet
So what exactly is the investment case here from a value-oriented lens?
In the most basic sense, Oaktree is likely attracted to the asymmetry: the idea that potential losses are limited, while potential gains could be substantial.
Let’s break this down into three key dimensions:
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Downside Protection:
Grab now has over $6 billion in net liquidity, with an additional boost from recent bond issuance, giving it an enormous cash buffer.
It is free cash flow positive, reducing the need for dilutive equity raises.
Its dominant market position makes it relatively insulated from disruptive competition.
It has already gone through the consolidation phase (notably, Uber exited Southeast Asia by selling to Grab), which minimizes pricing wars.
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Upside Optionality:
If advertising scales in tandem with user engagement, margins could expand meaningfully—much like Uber’s advertising business, which is now a major margin contributor.
Financial services could be transformative, especially in a region where over 70% of the population remains underbanked.
If operating margins eventually approach 20–25%—which is not inconceivable given gross margins already exceed 40%—free cash flow could compound quickly, unlocking considerable earnings power.
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Attractive Entry Price:
As of mid-2025, the stock has largely gone sideways for the year, offering investors a chance to enter at valuations potentially similar to or even below Oaktree’s cost basis.
My base case assumes a ~20–25% annual growth rate in revenue, with expanding EBITDA margins over the next five years. Even under conservative assumptions (i.e., a 20x earnings multiple in five years with lower margin assumptions), the stock could yield 20–50% upside.
Under more aggressive assumptions—30x earnings multiple and 20%+ operating margins—100–150% upside is possible.
This blend of downside support and multi-year upside potential is precisely the kind of setup that attracts veteran value investors like Howard Marks.
Management Alignment and Capital Allocation
Another reason to take Grab seriously as a long-term compounder is its management’s track record and alignment with shareholders.
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Founder-led: CEO Anthony Tan, the company’s co-founder, continues to own over 150 million shares, giving him both a financial and philosophical stake in Grab’s long-term trajectory. Founder-led firms tend to make bold but thoughtful capital allocation decisions and are less likely to chase short-term fads.
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Institutional Support: Large strategic investors like Uber and Toyota continue to hold meaningful stakes in the company—hardly tourist investors. These relationships offer not just capital, but potential synergies in technology, logistics, and product development.
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Smart Bond Issuance: Earlier this year, Grab issued $1.5 billion in zero-coupon convertible bonds—an unusual structure in today’s market. Importantly, a portion of these proceeds (~$300 million) was immediately used to buy back shares, signaling management’s conviction that the stock is undervalued.
The conversion price is set at a 40% premium, meaning dilution only occurs if the stock appreciates significantly—an outcome current shareholders would likely welcome.
This kind of thoughtful capital strategy—leveraging low-cost debt to buy equity and preserving cash flexibility—adds confidence to the long-term case.
Risk Considerations: Not Without Headwinds
Of course, no investment is without risk. While Grab’s risk profile is improving, there are still meaningful uncertainties:
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Regulatory Complexity: Operating across multiple countries exposes Grab to a patchwork of regulation. Some governments may eventually treat gig workers as full employees, which would raise labor costs significantly.
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Currency Volatility & Political Risk: Emerging market currencies can be unstable, and changing leadership in Southeast Asia can create swings in policy, particularly around tech and finance.
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Fintech Risks: Grab’s lending and financial services operations are growing fast—but lending in underbanked populations always carries credit risk. A spike in defaults or regulatory scrutiny could slow momentum.
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Execution Risk: The company’s ability to scale margins is not guaranteed. If it fails to reach sufficient operating leverage or overextends into unprofitable growth, the bull thesis weakens.
Still, the presence of strong liquidity, diversified revenue streams, and robust market share helps mitigate many of these concerns.
Final Thoughts: A Southeast Asian Compounder in the Making?
To summarize, Grab Holdings today offers an unusual blend of dominant market positioning, improving financial fundamentals, and optionality through fintech and advertising. Add in disciplined capital allocation and growing free cash flow, and you begin to see why a firm like Oaktree Capital would be willing to make a substantial investment.
This isn’t just a bet on one company—it’s a bet on the rising digital economy of Southeast Asia, delivered through a platform that has already emerged as the category leader.
And while I don’t personally own shares as of this writing, I find the setup compelling and worth ongoing monitoring. I’d prefer a lower entry price—or more conservative assumptions that still pencil out 40–50% upside in the low case—but I fully understand why sophisticated investors are warming up to this name.
If Grab continues to execute, improves margins, and unlocks the full value of its ecosystem, this could be one of the more intriguing multi-year compounders in the global consumer tech landscape.
Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.
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