‘SOFTBANK FUNDING OPENS UP POSSIBILITY’
Japan group can play consolidating role, merging US ride-hailing firm with Grab, says source
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, say industry sources.
Uber Technologies Inc said on November 12 that a planned deal with a consortium led by SoftBank and Dragoneer Investment Group was moving forward. The consortium plans to inject US$1 billion to US$1.25 billion (RM4.14 billion to RM5.18 billion) into Uber, and buy up to 17 per cent 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.
“SoftBank will play a consolidating role,” said a source close to Grab. “SoftBank as a board director in both companies (Uber and Grab) would fundamentally change the conversation.”
At US$68 billion, Uber is the most highly valued venturebacked 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 said it was necessary to establish itself in new markets.
“Doing a deal and combining the two businesses in Southeast Asia makes a ton of sense.
“He (Uber’s CEO) cuts his losses and gets a stake in the business that is from his perspective more than just ride-sharing,” said the source, referring to Grab’s foray into other markets for digital or cashless payments.
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.
People close to the SoftBank and Uber deal said 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.
However, shutting down Uber’s Southeast Asia operations to cut losses would enable the firm to “print money”, making for a much more palatable IPO, said one Uber investor.
Vinnie Lauria, a founding partner at venture capital firm Golden Gate Ventures, said he, too, thinks Uber would pull out of Southeast Asia.
Grab was the top-ranked ridehailing app in combined monthly active users on iPhone and Android phones in the first half in Malaysia, the Philippines, Singapore, Thailand and Vietnam, according to mobile data analytics firm App Annie. In Indonesia, GoJek outranks both Grab and Uber. Reuters