Uber cranks up ride-hailing battle with $3.5bn Saudi investment

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Uber cranks up ride-hailing battle with $3.5bn Saudi investment. US company takes on rivals with $11bn war chest

http://www.ft.com/cms/s/2/3ac7c982-2879-11e6-8b18-91555f2f4fde.html#axzz4AYwpjG3L

Uber has just turned six and received a very nice birthday present: a $3.5bn investment from Saudi Arabia’s sovereign wealth fund, a sum that is the largest single investment ever made in a start-up.

The deal underscores the feverish fundraising surrounding ride-hailing start-ups, and solidifies Uber’s position as the biggest venture-backed company in the world.

The new investment brings the company’s funds raised to more than $13.5bn, including convertible debt — a figure far greater than most companies raise even during an initial public offering. Of that total, Uber has about $11bn left in its war chest, including the convertible debt.

Talks between Uber and Saudi’s Public Investment Fund started in early March. David Plouffe, the company’s chief adviser and a board member, travelled to the region that month.

The PIF will own approximately 5 per cent of the company and Yasir Al Rumayyan, its managing director, will join Uber’s board.

“A lot of people were originally quite sceptical of Uber in our region, and the fact that PIF is investing is quite an indicator of how things are changing,” says Princess Reema Bandar al-Saud, a member of the company’s global policy advisory board.

The San Francisco-based company, which operates in 68 countries, has been spending heavily to win market share in China and in India, as well as to expand into new cities.

It has also been funding research initiatives such as its driverless car program, buying office buildings in the Bay Area, and developing products such as UberPool, which allows consumers to share rides with others for a cheaper rate. The company’s mission, in the words of Travis Kalanick, chief executive and co-founder, is to provide “transportation as reliable as running water, everywhere for everyone”.

The fresh cash comes as Uber’s Chinese rival, Didi Chuxing, is in the middle of its own fundraising round. Last month, the dominant ride-hailing company in China announced a $1bn commitment from Apple, its biggest minority investment ever. Although Didi operates only in China, it has been busy partnering and investing itself with Uber’s rivals in other markets, including Lyft in the US, Ola in India and Grab in Southeast Asia.

The $3.5bn injection points to the intensifying competition between Uber and its rivals, as the company now has more to spend on the subsidies for drivers and discounts to customers that it uses to stamp out rivals and gain market share. In the transportation industry there is a big reward for being the biggest in a market because the service with the most passengers and drivers tends to be more efficient.

Uber is the market leader in North America and many parts of Europe, however it faces strong local rivals in Didi in China and Ola in India, and has been spending heavily in both countries to catch up.

The latest fundraising also poses questions about whether Uber will move towards an initial public offering, a traditional rite of passage for a start-up of its size. The company has not indicated when it might go public, but in 2015 Uber issued convertible debt on terms that gradually penalise the company if it does not go public within one year.

[Raider of the lost Ark]

In related news the European Commission has told European Governments not to impede the businesses of the so called shared economy by imposing strict regulations on those business. I guess we all know how hard the lobbyists must have worked to make the Commission to make a statement like that. And it once again shows that these politicians simply have no understanding of the complexity of the problem. Their explanation was from a purely customer service standpoint, the very same standpoint that Über and AirBnB always bring up to justify their business. Über and AirBnB are having problems to get their feet on the ground in Germany and France. Not only is there the issue of tax evasion from the people that offer their services as drivers and hosts, there is also a competitive problem. The truth is, regular business like Taxis and Hotels etc. have very strict rules and laws imposed on them. From the permission to even operate their business to insurance to customer and worker safety, health issues, environmental issues and the list goes on and on. All of this is controlled by authorities and in case of any wrongdoing you will be fined or you even lose permission to operate your business in the worst case. Tax evasion is almost impossible since you are a registred company with tax ID etc.

Almost none of this apllies to Über and AirBnB drivers and hosts. Because they are private persons who just drive someone from time to time and share the same appartment as their guests. (yeah right, sure). At least this is what Über and AirBnB claim. Of course this is the biggest nonsense ever. Especially AirBnB. There are enough studies that show this is not true. Those are appartments someone bought with the intention to rent them out on a daily basis. Or a tenant renting out the appartment to make money. Both cases are usually against regulations. Normally a tenant is not allowed to sublet an appartment without the permission of the landlord of the appartment. This is definately part of their lease. It's safe to say no landlord will give permission under those circumstances. The other case, even if you are the owner of the appartment, zoning laws may not grant permission to rent out an appartment on a daily basis since this area or specific building only allows residential use, no business is supposed to be operated out of ones appartment.

I could go on how this misuse of living space is changing the society and community and how this affects the direct neighbours of those appartments. I could go on how Über and especially AirBnB are not supportive at all when it gets requests from authorities about their "hosts" and that it takes the involvement of a state attorney to realease data. I have aleady mentioned that there is the huge issue of possible tax evasion. How fitting to find LetterOne (which is registred in Luxemburg) and Google (which is registred in Ireland?) being top investors. Registred in countries that are tax havens.

It's no secret I have a huge issue with those businesses. It's wrong on so many levels. And those ridiculous evaluations are just the icing on the cake. All those investors are just looking for the IPO to cash in when they are first allowed to sell their shares.

The fact that the European Commission thinks it needs to support this kind of business speaks volumes and is just another reason why people are so sick and tired with those EU politicians.

[XXL]

In related news the European Commission has told European Governments not to impede the businesses of the so called shared economy by imposing strict regulations on those business. I guess we all know how hard the lobbyists must have worked to make the Commission to make a statement like that. And it once again shows that these politicians simply have no understanding of the complexity of the problem. Their explanation was from a purely customer service standpoint, the very same standpoint that Über and AirBnB always bring up to justify their business. Über and AirBnB are having problems to get their feet on the ground in Germany and France. Not only is there the issue of tax evasion from the people that offer their services as drivers and hosts, there is also a competitive problem. The truth is, regular business like Taxis and Hotels etc. have very strict rules and laws imposed on them. From the permission to even operate their business to insurance to customer and worker safety, health issues, environmental issues and the list goes on and on. All of this is controlled by authorities and in case of any wrongdoing you will be fined or you even lose permission to operate your business in the worst case. Tax evasion is almost impossible since you are a registred company with tax ID etc.

Almost none of this apllies to Über and AirBnB drivers and hosts. Because they are private persons who just drive someone from time to time and share the same appartment as their guests. (yeah right, sure). At least this is what Über and AirBnB claim. Of course this is the biggest nonsense ever. Especially AirBnB. There are enough studies that show this is not true. Those are appartments someone bought with the intention to rent them out on a daily basis. Or a tenant renting out the appartment to make money. Both cases are usually against regulations. Normally a tenant is not allowed to sublet an appartment without the permission of the landlord of the appartment. This is definately part of their lease. It's safe to say no landlord will give permission under those circumstances. The other case, even if you are the owner of the appartment, zoning laws may not grant permission to rent out an appartment on a daily basis since this area or specific building only allows residential use, no business is supposed to be operated out of ones appartment.

I could go on how this misuse of living space is changing the society and community and how this affects the direct neighbours of those appartments. I could go on how Über and especially AirBnB are not supportive at all when it gets requests from authorities about their "hosts" and that it takes the involvement of a state attorney to realease data. I have aleady mentioned that there is the huge issue of possible tax evasion. How fitting to find LetterOne (which is registred in Luxemburg) and Google (which is registred in Ireland?) being top investors. Registred in countries that are tax havens.

It's no secret I have a huge issue with those businesses. It's wrong on so many levels. And those ridiculous evaluations are just the icing on the cake. All those investors are just looking for the IPO to cash in when they are first allowed to sell their shares.

The fact that the European Commission thinks it needs to support this kind of business speaks volumes and is just another reason why people are so sick and tired with those EU politicians.

Amen to everything you wrote. Sickening to think that "our good ally" against evil Assad is an even more oppressive dictator who gets a pass for debt, petrodollar, currency wars reasons and they are now pumping such an obscene amount of cash into business realities exempt from regulations, laws and a taxation system that applies to small-medium businesses and in general to us mere mortals. The Holy Ghost of those "democracy exporting" middle east conflicts reigns hypocritically supreme.