Uber, battling internal upheaval and local rivals, to be saved by Softbank?

In the longer run, as the ecosystem for driverless transport and connected cars emerges, probably first in America, Uber might be the one to bet on

Harichandan Arakali
Updated: Jul 27, 2017 10:53:47 AM UTC
uber_sm
Photo: Aaron Josefczyk / Reuters

It’s been a week since an overheated engine on this writer’s seven-year-old car has become the darling of the car service technicians at one of Bengaluru’s largest authorised car service stations for that make of automobile, given the stiff bill they will soon be able to present the owner with.

With autorickshaws unpredictable, and school assembly times being sacrosanct, as the routine is to drop off the son en route to work, the default option has been to schedule a cab. The battle for my custom and millions of others across India’s largest metros might just get fiercer, between local strongman Ola and larger foreign company Uber Technologies, the world’s most valuable startup.

Even though last year ended with Ola’s founder Bhavish Aggarwal complaining that India was far more open to foreign incursions — along with Flipkart founder Sachin Bansal — unlike China, both have since benefited from foreign money as well. Flipkart raised a whopping $1.4 billion, which it announced in April and ANI Technologies, which operates the Ola ride-hailing network, generally seen as India’s largest, is said to have raised $350 million earlier this year.

Now the twist in the tale, as reported by the Wall Street Journal yesterday, is that Softbank, which is among the largest investors in ride-hailing networks from Southeast Asia to India to Brazil, is said to be in talks to pick up a multibillion dollar stake in Uber.

If that goes ahead, it will be at a time when Uber is facing everything from an ousted CEO to investigations and overhauls due to allegations of a culture of male chauvinism and sexual harassment, to rivals around the world raising more money.

Uber has already ceded the Chinese ride-hailing market to Softbank-backed Didi Chuxing, while it has a stake in the Chinese company, and recently struck a deal with Russia’s Yandex, which made the local ride-hailing company the dominant player in that market, while Uber again gets significant share in the business.

And three days ago, the very same Softbank and Didi invested $2 billion in Grab, an Uber rival in markets across Southeast Asia, including Malaysia and Thailand. Grab has said it will raise another $500 million.

Here in India, a market in which Uber is investing billions of dollars, Ola is said to be in talks to raise $400 million in fresh funding, this time from Tencent Holding, which was one of the three strategic investors in Flipkart’s $1.4 billion-round. Ola’s spokesman declined to comment on this, while an industry executive who monitor’s the company’s operations very closely said this was “speculative” at this point.

Softbank’s Chairman Masayoshi Son has raised $93 billion of his targeted $100 billion ‘Vision Fund’ to be invested in tech ventures around the world, with investors, including Saudi Arabia and Apple. In ecommerce, Softbank faces an established, and publicly listed giant, in Amazon, one of the reasons why it is looking to stitch together a deal in India that will give it a big stake in local leader Flipkart.

In ride-hailing, however, a chance to take a strong stake in Uber, with its Silicon Valley-led technological superiority — and proximity to America’s best research and engineering universities — might be simply too tempting to pass up. Especially from the longer-term perspective, as an ecosystem for driverless cars emerges, and will probably emerge first in the US, while the Chinese are making significant investments in the field as well, Uber might be the one to bet on.

The thoughts and opinions shared here are of the author.

Check out our end of season subscription discounts with a Moneycontrol pro subscription absolutely free. Use code EOSO2021. Click here for details.

Post Your Comment
Required
Required, will not be published
All comments are moderated