Published On: Thu, Jun 2nd, 2016

Uber Receives $3.5 Billion From Saudi Sovereign Public Investment Fund

Uber Saudi Arabia

The investment will allow the company to expand in the Middle East, North Africa and China.

Uber, on Wednesday, said it had raised $3.5bn in funding from Saudi Arabia’s Sovereign Public Investment Fund. The biggest ever investment from a single investor will help the ride hailing service expand in the Middle East and North Africa.

The company, which is the most valuable private business in Silicon Valley, has received over $11 billion from investors since its inception, which redefined private fund-raising by drawing hundreds of millions rapidly almost every six months. Uber has drawn investments from an array of investors like BlackRock, Goldman Sachs, Morgan Stanley, Qatar, and now Saudi Arabia, in its quest for global expansion.

Uber, now valued at $62.5 billion after the investment from Saudi Arabia, is said to have found a crucial partnership and committed $250 million in the Middle East and North Africa where its growth has been rapidly expanding. Uber now operates in nine countries and 15 cities in the region while competing against local ride-hailing startups like Careem, which operates in 20 cities in the region.

Uber’s board will see the managing director at the Public Investment Fund, Yasir Al Rumayyan, take a seat on Uber’s board, joining Mr. Kalanick and other directors, including Arianna Huffington.

“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,” stated Mr. Al Rumayyan.

The investment was referred to as a “vote of confidence in our business,” by Uber
co-founder and Chief Executive Officer Travis Kalanick in his statement, “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.”

Uber said that it has 395,000 active riders and 19,000 drivers in the Middle East, a five-fold number in a year. It also said that its expansion is a boon for Saudi Arabia where –  about 80 percent of the riders are women, and women are discouraged to drive because of fatwas, religious edicts issued by conservative Muslims.

The start-up did not express if it planned to hire women drivers in the kingdom, unlike most its operating regions, whereas it seeks to aid the kingdom’s 2030 vision which includes a plan to increase the female work-force to 30 percent. Princess Reema bint Bandar al-Saud, who sits on Uber’s public policy advisory board, has worked with Uber in bringing the service into the country and has the support of female service users expressed Uber, and that the investment was a clear sign of willingness to transform in the region.

Uber will also utilise a portion of the funds to harness growth in markets including China, where the company is facing strong competition from market leader Didi Chuxing which is backed by Internet giants Alibaba Group Holding Ltd and Tencent Holdings Ltd. Both the competitors have invested heavily on subsidised fares to woo and expand their customer base.

“What we continue to be most focused on though is the growth of our businesses around the world, particularly in developing markets like China,” said Allen Penn, head of Asia operations at Uber, in a Hong Kong technology conference.

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