January 31, 2019 / 3:24 AM / 22 days ago

Thai Central Group and Grab to expand on-demand delivery

BANGKOK (Reuters) - Thailand’s Central Group, the country’s largest retail conglomerate, said on Thursday it will invest $200 million in a local unit of Singapore-based ride-hailing app Grab, expanding an existing partnership.

A Grab motorbike helmet is displayed during Grab's fifth anniversary news conference in Singapore June 6, 2017. REUTERS/Edgar Su

Central Group, which owns department stores, restaurants, and hotel chains in Thailand, said it will “acquire a significant non-controlling stake” in the Thai subsidiary which already delivers food from Central’s restaurants to customers.

The two companies will work together on transport, food and grocery delivery, Central’s executive chairman and chief executive, Tos Chirathivat, said.

It is the first time a partner has invested in Grab’s local business, Grab Chief Executive Anthony Tan told reporters.

The partnership will expand Central’s e-commerce and logistics capabilities, president of Central Group, Yol Phokasub, told Reuters in an interview.

“We want to meet customer demand of speed...GrabExpress fits the bill,” Yol said referring to Grab’s delivery service.

Grab would help Central reduce the delivery time of goods from stores to customers, he said adding that he expects there to be significant growth in on-demand deliveries.

Grab would be another channel for Central’s stores and its “products would eventually be on the app,” Tarin Thaniyavarn, Grab’s country head told Reuters.

Central is also looking to expand into other areas.

“We are going to enter online travel, (with) Booking and Agoda,” Tan said.

Travel giant Booking invested $200 million in Grab last year.

Tourism is a major contributor to Thailand’s economy, which has lagged behind Southeast Asian peers.

Thailand saw a record 38.27 million tourists in 2018.

Cross-promotion between Central’s hotels and Grab would increase awareness of the app among tourists, Tarin said.

The deal between Central and Grab comes soon after Grab’s Indonesian rival, Go-Jek, launched ride-hailing and food delivery operations in Thailand.

Central in 2017 launched a joint venture with China’s second-largest e-commerce platform, JD.com, which backs Go-Jek.

Ride-sharing is not fully regulated in Thailand, with police occasionally fining drivers.

The market for ride-hailing services in Southeast Asia is expected to surge to almost $30 billion by 2025 from $7.7 billion in 2018, according to a Google-Temasek report.

Reuters first reported in September that Central and Grab were in talks over the stake sale.

Reporting by Chayut Setboonsarng and Patpicha Tanakasempipat; Writing by Patpicha Tanakasempipat; Editing by Rashmi Aich and Elaine Hardcastle

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