US-based ride hailing platform Uber has entered talks with parties including telecommunications group SoftBank and Chinese counterpart Didi Chuxing to raise up to $12bn, Bloomberg reported today.
In addition to SoftBank and Didi Chuxing, Uber is also in discussions with investment group Dragoneer and growth equity firm General Atlantic, people familiar with the matter told Bloomberg.
Internet company Tencent has also considered an investment in Uber, but the four firms above have signed an exclusivity deal with Uber that for now bars anyone else from supplying funding.
Uber runs an app-based on-demand ride service that is the market leader in the US and much of Europe, and which is present in markets across the world. It has raised more than $11.5bn in debt and equity financing altogether.
Between $1bn and $1.5bn of the new funding would be used to buy primary shares at the same $62.5bn valuation as that at which Saudi Arabia’s Public Investment Fund invested $3.5bn in Uber in 2016.
Another $2bn to $10bn would theoretically be used to buy stock from early Uber investors at a lower valuation, though the actual price would depend on the willingness of shareholders to sell, one of the sources said. Goldman Sachs is advising Uber on the deal.
The status of the deal is questionable however, because it relies on the resolution of the legal battle between venture capital firm and Uber investor Benchmark and the company’s co-founder and ex-CEO Travis Kalanick.
Benchmark is suing Kalanick, alleging that a deal struck in June 2016 allowing him to choose three new members for Uber’s then eight-person board was made fraudulently, due to his omission of details concerning negative corporate conduct which would have affected the decision.
The crux of the suit is that Kalanick, who owns about 10% of Uber’s shares, immediately elected to take one of the board seats as soon as he was ousted as CEO in June 2017, a move Benchmark, which holds roughly 13% of Uber’ shareholding, saw as a move to retain control of the company.
The prospective funding would theoretically involve two of the investors taking the other two seats, or possibly two new seats, though while those are still officially under Kalanick’s control the outcome of the negotiations will be uncertain.
Further complicating the situation, Kalanick is said to be in favour of SoftBank investing and taking a board seat, while Benchmark declared last week it expects Uber’s valuation to “comfortably” reach $100bn in the next two years, a statement that will surely impact any secondary deals.
Uber’s existing investors include Didi Chuxing and GV, a corporate venturing subsidiary of internet technology conglomerate Alphabet, as well as software provider Microsoft, media company Times Group, conglomerate Tata and Sons, Goldman Sachs and Fidelity Investments.