In what would be Uber’s biggest cash infusion by a single investor in its long, illustrious history of getting billions in investment, Uber has turned to the Middle East, to raise a whopping $3.5 Billion. The investor ? Saudi Arabia’s Public Investment Fund.
Uber, in an officially released statement, said that this massive round was a part of its ongoing financing round, which valued the company at close to $62.5 Billion — a number which has already set records in terms of valuation for a VC backed company in the history of private equity investments. As a part of this round, a managing director at the Public Investment Fund, Yasir Al Rumayyan, will take a seat on Uber’s board, joining Uber’s chief executive, Travis Kalanick, and other directors. None of Uber’s current investors have been given an exit.
The fundraising, while of course gets Uber loads of money to further up the ante against its regional competitors globally, also gives it a unique strategic edge of entering the Middle East market. Uber already has plans to invest a massive $250 Million in the Middle East — a region where it already serves in 9 countries and 15 cities.
In Saudi to be specific, the company has grown to a decent 19,000 drivers offering over 385,000 active riders, rides in Uber cabs. Talking about the importance of this round and the middle-eastern region as a whole, CEO Travis Kalanick said,
We appreciate the vote of confidence in our business as we continue to expand our global presence. Our experience in Saudi Arabia is a great example of how Uber can benefit riders, drivers and cities and we look forward to partnering to support their economic and social reforms.
Interestingly though, Uber has raised this cash at the same valuation as its previous billion dollar round, hinting that the company might have hit the peak in terms of valuation and may well now have sufficient funds to operate until an IPO.
Saudi Arabia too sees this as an investment with strategic advantages, considering that the country is now coming up to build its economy from not just oil, but other aveneus as well. Saudi’s Public investment fund — expected to grow to $2 Trillion under management — is an important cog in the wheel.
Highlighting the importance of this investment, Al Rumayyan said in a statement,
We’ve seen firsthand how this company has improved urban mobility around the world, and we’re looking forward to being part of that progress, As the Kingdom of Saudi Arabia’s sovereign investment arm, we’re focused on achieving attractive long-term financial returns from our investments, while supporting Saudi Arabia’s Vision 2030, the blueprint for diversifying our economy away from oil.
Money just keeps coming to the US based ride hailing app. The company has almost every major brand/public fund globally, as a investor within the company. Toyota for example, just recently invested in Uber to help the company achieve its self-driving cab future. Uber also has backing from China’s Alibaba — the global ecommerce behemoth which has helped accelerate Uber’s earlier-stalled China expansion.
Keeping these companies apart, Uber getting backed by sovereign wealth funds like Saudi’s and earlier Qatar’s, has another major advantage for the company. These funds have a far longer investment capacity as well as horizons as compared to VC/PE firms which are investing with a 8-19 year mindset.