Uber has announced that it is selling its South-east Asian business to rival Grab, giving the latter a massive step up in the thriving region of 620 million people.

Under the terms of the deal, Grab will snap up all of Uber’s operations in Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, including its food delivery business UberEats.

Uber will receive a 27.5 per cent stake of Grab in return, and its chief executive, Dara Khosrowshahi, will join Grab’s board. Grab is thought to be worth about $6bn (£4.2bn).

Pulling out of South-east Asia gives Uber the opportunity to shore up its balance sheet ahead of a planned initial public offering on the stock exchange, pencilled in for 2019.

The company has burned through more than $10bn since it was founded nine years ago and, since his appointment to the top job last year, Mr Khosrowshahi has repeatedly signalled that he’s willing to rationalise Uber’s geographic presence to safeguard the company’s financial sustainability.

Back in 2016, Uber already sold its business in China to Didi.

The move will likely be particularly welcomed by SoftBank Group, which is the largest investor in both companies and has for some time been pushing to reduce competition in South-east Asia.

“Today’s acquisition marks the beginning of a new era,” Grab’s chief executive Anthony Tan said in a statement on Monday.

“The combined business is the leader in platform and cost efficiency in the region. Together with Uber, we are now in an even better position to fulfil our promise to outserve our customers. Their trust in us as a transport brand allows us to look towards the next step as a company: improving people’s lives through food, payments and financial services.”

Mr Khosrowshahi said the deal is “testament to Uber’s exceptional growth across South-east Asia over the last five years”.

“It will help us double down on our plans for growth as we invest heavily in our products and technology to create the best customer experience on the planet,” he said.