US-based ride hailing platform Uber has approved organisational changes that will allow telecommunications firm SoftBank to invest $1bn to $1.25bn in the company, CNBC reported yesterday, citing unnamed sources.
The deal, which will value Uber at $69bn, was approved by its board of directors along with a proposal to expand the size of the board from 11 to 17 seats, and resolved to launch an initial public offering by the end of 2019.
Founded in 2009, Uber has built an on-demand ride service that operates in more than 80 countries, and is the market leader in several of them including the US.
However, the company has been surrounded by bad publicity concerning its corporate ethics, culminating in the removal of co-founder Travis Kalanick as CEO in June 2017.
Reports last month suggested SoftBank intends to combine with investment firm Dragoneer and on-demand transport service and existing backer Didi Chuxing to acquire a total of $8bn to $10bn of Uber shares, the majority of which would be bought from early investors in the company.
The secondary element of the prospective deal has not been confirmed, but could be boosted by a board decision to cut the strength of the series B shares held by Kalanick and early investors, from 10 times the voting power of an ordinary share to the same value.
The board expansion was agreed after Kalanick used rights awarded to him while CEO to fill two vacant board seats, which he granted to Xerox chairwoman Ursula Burns and investment banker John Thain. IT was done so to placate other prominent investors including venture capital firm Benchmark.
Uber told CNBC in a statement: “Today, after welcoming its new directors Ursula Burns and John Thain, the board voted unanimously to move forward with the proposed investment by SoftBank and with governance changes that would strengthen its independence and ensure equality among all shareholders.
“SoftBank’s interest is an incredible vote of confidence in Uber’s business and long-term potential, and we look forward to finalising the investment in the coming weeks.”
Prior to SoftBank’s forthcoming investment, Uber had raised about $11.5bn in equity and debt financing, and counts Didi Chuxing, media companies Axel Springer and Bennett Coleman and Co, software provider Microsoft and internet and technology group Alphabet as investors.
Other Uber investors include Tata Capital, part of conglomerate Tata & Sons, as well as Fidelity Investments, Goldman Sachs, Morgan Stanley, BlackRock, Menlo Ventures, First Round Capital, General Atlantic, TPG Growth, Sherpa Capital and Founder Collective.