Uber investors sell at big discount, but still make billions
DETROIT: Investors in the Uber ride-hailing service didn’t get all they wanted in selling at least part of their holdings to a group led by Japanese technology conglomerate SoftBank. But don’t show them too much sympathy.
Even though they sold at roughly a 30% discount from what the shares were worth in 2016, those who invested early made nearly 100 times their initial stake, going from around 35 cents per share to just under $33, according to one investor who requested anonymity because the sales are private.
Uber was valued around $68.5 billion during a 2016 capital investment, but it dropped to somewhere above $48 billion in the Softbank deal announced last week. The reasons for the discount are many—among them the seemingly endless string of scandals, lawsuits and fights that plagued Uber through almost all of 2017. Also, competition has gotten tougher from Lyft and Grab in the US, as well as Ola in India, and several emerging services elsewhere.
Rohit Kulkarni, managing director of Sharespost, a company that analyses private company investments, says three big events that happened around the time that Softbank began courting investors combined to discount the shares.
Just before Softbank’s intent to shop for shares was announced, regulators in London refused to renew the cab-hailing app’s license to operate. Then the data hack and cover-up were revealed, and the company told investors its third-quarter net loss had widened to $1.46 billion on huge legal costs. The events helped Softbank’s group get a better deal, Kulkarni says.
Many big Uber investors include venture capital firms that got in early. They hedged their bets, selling part of their stake to bring big profits to their shareholders while holding the rest for big gains if the company gets past the scandals, the investor said.
All-in, the Softbank group will pump about $9 billion into Uber, including $1.25 billion in new shares that were purchased at the 2016 valuation. Softbank acquired about 15% of Uber, while other investors in its group got around 3%.
Softbank, which has global investments in other ridehailing companies, gets two seats on the board and will help Uber navigate the tough global competition, says Kulkarni. Uber’s new CEO Dara Khosrowshahi and COO Barney Harford are experienced executives who successfully increased share value at travel booking companies, says Kulkarni, who expects Uber to be worth a total of $100 billion by the time it offers shares to the public sometime in 2019. NEW DELHI : State-run lenders Bank of Maharashtra, Central Bank of India and UCO Bank on Wednesday got board approvals to raise a total of ₹2,348 crore by selling shares to the government, exchange filings by these banks showed.
This comes after the government informed each of the banks on December 28 that it has allocated capital to them. According to an executive director of a state-run bank, who spoke under condition of anonymity, this allocation is under the 2015 Indradhanush plan, for which the government has made budgetary allocation of ₹20,000 crore in bank recapitalisation over this fiscal year and the next.
Banks, especially state-owned lenders, are need in of capital to not only meet regulatory requirements under the so-called Basel III norms, which will be fully implemented from April 2019, but also to clean up stressed balance sheets.
Indian banks are sitting on stressed asset pool of over ₹10 lakh crore. With these three banks, the centre has now allotted ₹7,577 crore to six public sector banks, all of whom are under the Reserve Bank of India’s prompt corrective action. The other three are IDBI Bank, Dena Bank and Bank of India. Of these, IDBI Bank has got the highest allocation of ₹2,729 crore.