Gerstner calculates over $1 billion in cost savings for Grab employees and shareholders.
“And so if you say it's 30 percent on a $4,000,000,000 raise, that's over a billion dollars of savings. Right? Over $1,000,000,000 of indirect cost savings to the employees and the shareholders.”
Gerstner claims Grab achieved 20-30% higher valuation than traditional IPO would have delivered.
“So in a traditional IPO, let's say you have a $10,000,000,000 enterprise value raising a billion dollars. If it's being underpriced, he would argue structurally by 40%.”
Gerstner says traditional IPO costs include upfront fees and structural underpricing as the larger expense.
“There's the upfront fee, five and a half, 6%, whatever they're paying on the amount of capital raised. But he would argue the much bigger expense, right, is the indirect cost of the structural underpricing.”