Asian Stock Markets
SoftBank Group’s multi-billion dollar investment in Uber Technologies
Inc opens up the possibility of combining it with other ride-hailing
assets the Japanese group owns in a consolidation of a rapidly growing
business across Asia.
At $68 billion, Uber is the most highly valued venture-backed company in the world. But the lofty valuation has come at the cost of a heavy hit to Uber’s bottom line, which the firm has said was necessary to establish itself in new markets.
Any deal will likely be similar to the one Uber struck with DiDi last year, in which it took a stake in the Chinese company and pulled out its own business, the source said.
People
close to the SoftBank and Uber deal say many stakeholders
would like to give the competition in Southeast Asia more time to play
out, given the appeal of cheap labour and a growing middle class with
disposable income in the region.
While many tech firms go public without a profit, Uber’s level of loss -- $645 million in the second quarter this year -- could be alarming to some investors. After folding its China business into DiDi last year, Uber sharpened its focus and resources on India and Southeast Asia, the latter a promising market of nearly 650 million people, many of whom are young and tech-savvy.
Grab, meanwhile,
bolstered by its financing from Softbank and DiDi, has expanded from
ride-hailing to other digital payment solutions as it looks to use its
platform for financial services such as lending.
Uber Technologies Inc said on Nov. 12 that a
planned deal with a consortium led by SoftBank and Dragoneer Investment
Group was moving forward. The consortium plans to inject $1 billion to
$1.25 billion into Uber, and buy up to 17 percent of existing shares in a
secondary transaction.
SoftBank has also been a
big investor in Uber’s rivals across Asia, including Southeast Asia’s
Grab, China’s DiDi Chuxing, and India’s Ola, as it works to achieve
founder Masayoshi Son’s vision of a future driven by artificial
intelligence and interconnected devices.
At the
same time, ride-hailing companies have been competing fiercely across
Asia to attract both riders and drivers, with discounts and promotions
that have driven down profit margins.
At $68 billion, Uber is the most highly valued venture-backed company in the world. But the lofty valuation has come at the cost of a heavy hit to Uber’s bottom line, which the firm has said was necessary to establish itself in new markets.
Any deal will likely be similar to the one Uber struck with DiDi last year, in which it took a stake in the Chinese company and pulled out its own business, the source said.
It’s
not clear whether SoftBank has discussed or proposed any deal with Grab
with Uber’s directors. The SoftBank investment into Uber has not yet
been finalised.
While many tech firms go public without a profit, Uber’s level of loss -- $645 million in the second quarter this year -- could be alarming to some investors. After folding its China business into DiDi last year, Uber sharpened its focus and resources on India and Southeast Asia, the latter a promising market of nearly 650 million people, many of whom are young and tech-savvy.
But Uber has struggled in Asia,
having run-ins with some local regulators, including more recently in
the Philippines, and seeing a slew of exits by senior executives in
Indonesia, Malaysia, Vietnam and India.
No comments:
Post a Comment