GRABBING OPPORTUNITY?
UBER is preparing to sell its Southeast Asian business to Singapore’s Grab in exchange for a sizeable stake in the latter, imitating its strategy in China and Russia, say sources.
UBER is preparing to sell its Southeast Asia business to Singapore’s Grab in exchange for a sizeable stake in the company, according to a CNBC report.
The report, citing two sources with knowledge of the matter, said no deal had been reached yet, and the timing of any such deal was uncertain.
Grab provides private car, motorbike, taxi and carpooling services in more than 100 cities across Southeast Asia.
The company claimed to have 95 per cent market share in taxi ride-hailing when it announced plans to raise more than US$2.5 billion (RM9.8 billion) from SoftBank and other investors last year.
The move would mimic Uber’s strategy in China, where the company sold its ride-hailing operation to Didi for 20 per cent ownership, and Russia, where the company merged its local business with Yandex’s ride-hailing business for a 37 per cent stake.
The objective would be to help Uber reel in its costs in preparation for an initial public offering (IPO) as soon as next year, said the sources.
Since taking over from cofounder Travis Kalanick in August, Uber chief executive officer Dara Khosrowshahi has focused on cleaning up the company’s battered reputation and instilling financial discipline to push towards profitability.
Uber’s loss surged 61 per cent last year to US$4.5 billion, according to numbers released last week, though its loss in the fourth quarter narrowed from the prior period.
A tie-up with Grab would also play into SoftBank’s efforts to exert greater control over the global ride-sharing market.
Last month, the Japanese tech conglomerate bought about a 15 per cent stake in Uber, mostly buying shares from existing investors.
SoftBank also owns shares in Grab, Didi, India’s Ola and Brazil’s 99, and has publicly expressed interest in Lyft, Uber’s main United States rival.
At the Goldman Sachs Technology and Internet Conference, here, last week, Khosrowshahi said that competing against local players was very hard.
“I think the team ran through an inventory of where we competed, and if we compete on let’s say even on a dollar-for-dollar basis against the local player, paying the same amount to drivers, collecting the same amount from riders, in general where we are now is, if both players are kind of spending equally we tend to win share. We’ve got a better brand, we’ve got better technology, better network, etc. Whatever it is, we tend to win share. There are certain markets, China and Russia, where that wasn’t true. And if your only competitive advantage, or the only reason you can be in a market is because you can spend money, that’s not exactly a reasonable proposition.”
Reuters reported in November, citing industry sources, that a SoftBank investment in Uber would make it possible for the company to consolidate some of its ride-hailing assets across Asia.
An Uber investor told Reuters that shutting its Southeast Asia unit would allow the company to “print money” and make an IPO more realistic.
Uber and Grab declined to comment.