Uber confirms SoftBank investment that may pave road to 2019 IPO
The Press Association understands that the consortium is set to build a near-14% stake.
Ride hailing firm Uber has clinched a deal with Japan’s SoftBank and San Francisco’s Dragoneer on an investment that could lead the way to its stock market flotation in 2019.
The Press Association understands that a consortium led by the two firms is set to build an initial stake worth around $1 billion (£764 million) before buying further shares from existing shareholders and Uber employees that would bring its holding to around 14%.
The move would also pave the way for the company’s much-awaited stock market flotation by the end of 2019.
Uber confirmed in a statement that an agreement had been struck, but did not provide further details.
“We’ve entered into an agreement with a consortium led by SoftBank and Dragoneer on a potential investment,” Uber said.
“We believe this agreement is a strong vote of confidence in Uber’s long-term potential.
“Upon closing, it will help fuel our investments in technology and our continued expansion at home and abroad, while strengthening our corporate governance.”
Uber is currently valued at around $68.5 billion (£52.4 billion), but reports suggest that the stock offers would be based on a lower valuation, making the total value of the multibillion-dollar deal unclear.
But Richard Windsor, an analyst at Edison Investment Research, said it will help raise confidence in the ride hailing firm which has suffered a number of blows over the course of the last year.
“The deal also goes hand in hand with agreements to restructure Uber’s corporate governance in a bid to draw a line under the disastrous 2017 that Uber has had,” Mr Windsor said.
“This is badly needed as management turnover, bad press, unhappy drivers and a series of scandals has led to the company focusing on anything but its core business in 2017.
“This has resulted in a meaningful deterioration of its market position and outlook in our opinion.”
It has faced increased competition in the US, where rival Lyft has recently gained backing from Google which is interested in its promoting self-driving technology, and has been squeezed in Russia by local competitor Yandex.
Here in the UK, the ride-hailing firm is battling to keep its service running in London and is planning to appeal a tribunal ruling that its drivers were “workers” and entitled to the minimum wage, sick pay and paid leave.
TfL stripped the ride-hailing firm of its licence in September, raising concerns over Uber’s approach to reporting serious criminal offences, how drivers’ medical certificates are obtained, how criminal record checks are carried out, and its use of technology which allegedly helps it to evade law enforcement officials.
Mr Windsor said: “It is increasingly looking like Uber will end up with USA and a host of smaller markets where there has been no particularly strong local competitor.
“India is still in play and could be a source of conflict as when this deal closes, SoftBank will have a meaningful position in both Indian rivals.”