As the funding war between ride-hailing services deepens, new reports from WSJ confirm that the American cab aggregator Uber has secured a $1.15 billion leveraged loan, with a 5 per cent yield.
As we’d reported a couple weeks ago, there were rumors that the cab aggregator was looking to add more money to its war chest. Reports suggested that it was in the process of finalizing the terms of the leveraged loan deal.
The investment received by Uber in this round is on the lower end of the bargain scale. It was planning to receive funds somewhere in the ballpark of $1-2 billion. It initially targeted a 4-4.5 per cent yield but had to finally settle for 5 per cent. The leveraged loan proceedings have been led by Morgan Stanley, including participation from Barclays PLC, Citigroup Inc. and Goldman Sachs Group Inc.
Uber has so far relied heavily on raising funds by equity dilution. It had raised over $12.51 billion in equity financing since 2009 as opposed to just around $2 Billion in debt financing. So to avoid further dilution, Uber has strayed away from selling more of its precious stocks in exchange of moolah. It has opted for a leveraged loan to fund its expansion and fight back its fierce Chinese rival — Didi Chuxing. All the capital raised today originates from multinational institutions.
Uber has added a massive $5.5 billion to its war chest in a matter of weeks. To fuel its rivalry with Didi, the company has recently closed a $3.5 billion equity round from Saudi Arabia’s Public Investment Fund. While its rival isn’t sitting idle either. Didi has trumped Uber in its latest round by raising a staggering $7 Billion from a host of powerful investors, including Apple.
And if the rumor mill is to be believed again, then it hints that CEO Travis Kalanick doesn’t plan to stop anytime soon. Uber is pacing forward with full speed to add even more money to his flooding war-chest.