Ride-Hail­ing Firm Lyft Races to Leave Uber be­hind in IPO Chase

Lyft’s pub­lic is­sue will test in­vestors’ ap­petite for the ride-hail­ing busi­ness

The Economic Times - - Around The World -

Joshua Franklin &

Heather Somerville

Ride-hail­ing com­pany Lyft beat big­ger ri­val Uber Tech­nolo­gies in fil­ing for an ini­tial pub­lic of­fer­ing (IPO) on Thurs­day, de­fy­ing the re­cent mar­ket jit­ters and tak­ing the lead on a string of bil­lion-dol­larplus tech com­pa­nies ex­pected to join Wall Street next year.

Lyft’s IPO will test in­vestors’ ap­petite for the most highly val­ued Sil­i­con Val­ley com­pa­nies and for the ride-hail­ing busi­ness, which has be­come a wildly pop­u­lar ser­vice but re­mains un­prof­itable and has an un­cer­tain fu­ture with the ad­vance of self-driv­ing cars.

San Fran­cisco-based Lyft, last val­ued at about $15 bil­lion in a pri­vate fundrais­ing round, did not spec­ify the num­ber of shares it was sell­ing or the price range in a con­fi­den­tial fil­ing with the Se­cu­ri­ties and Ex­change Com­mis­sion (SEC).

Lyft could go pub­lic as early as the first quar­ter of 2019, based on how quickly the SEC re­views its fil­ing, peo­ple fa­mil­iar with the mat- ter said. Lyft’s val­u­a­tion is likely to end up be­tween $20 bil­lion and $30 bil­lion, one source added.

The ride ser­vice was set up in 2012 by en­trepreneurs John Zim­mer and Lo­gan Green and has raised close to $5 bil­lion from in­vestors. While it con­tin­ues to grow faster than its larger com­peti­tor, Uber, it is also los­ing money.

Flag in the Ground

The fil­ing by Lyft, which hired JPMor­gan Chase & Co, Credit Suisse and Jef­feries as un­der­writ­ers, plants a flag in the ground to go pub­lic be­fore larger ri­val Uber. The race be­tween them is one of the most closely watched in Sil­i­con Val­ley.

A pro­vi­sion in­cluded in an in­vest­ment by SoftBank into Uber re­quires the com­pany to file for an IPO by Septem­ber 30 or the com­pany risks al­low­ing re­stric­tions on share­holder stock trans­fers to ex­pire.

Uber in­vestor Mitchell Green, a part­ner at Lead Edge Cap­i­tal, said Lyft go­ing pub­lic first bodes well for Uber, be­cause if Lyft trades at a high mul­ti­ple, the much-larger Uber will com­mand even more money.

“Lyft has built a very US-based rideshare busi­ness that has done well,” Green said. “If pub­lic mar­ket in­vestors get ex­cited about that they are re­ally go­ing to get ex­cited about a busi­ness that is 5X the size.”

Ear­lier this year, Lyft said it had 35% of the US ride-hail­ing mar­ket. The com­pany op­er­ates in the US and Canada while Uber is in much of the world and has other busi­nesses in­clud­ing freight-hail­ing and food de­liv­ery.

Both Uber and Lyft have lost huge sums of money by spend­ing heav­ily com­pet­ing with each other for pas­sen­gers and driv­ers and en­ter­ing new mar­kets, although they have re­cently raised prices and re­duced sub­si­dies. The com­pa­nies have held out the prom­ise of boost­ing prof­itabil­ity by even­tu­ally re­plac­ing hu­man driv­ers with ro­bots pi­lot­ing au­ton­o­mous ve­hi­cles, but a fu­ture of cities and sub­urbs criss­crossed by fleets of self-driv­ing cars is years away, given the tech­ni­cal and reg­u­la­tory chal­lenges, par­tic­u­larly in the US.

Both Uber and Lyft have lost huge sums of money by spend­ing heav­ily com­pet­ing with each other

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