Biggest news in Singapore yesterday was the merger between Uber's Southeast Asia wing and Grab. This is not something new. After years of fighting and bleeding money in markets all around the world, Uber decided to try a different route and has been partnering with many of its competitors in major markets.Exchanged its China's operation for 17.7% stake in Didi Chuxing
On August 2016, Uber sold its China operations to Didi Chuxing (China's leading ride hailing company). Didi invested US $1 billion into Uber (Parent company) at US $68 billion valuation. Uber on the other hand, receives 17.7$ stake in Didi. One year after the merger though, there have been feedback that it is now harder and more expensive to get a ride through Didi.
Exchanged its Russia's operation for 36.6% stake in Russia Ride Hailing Company
On July 2017, Uber merged its Russia operations with another ride-hailing company startup to form the Yandex.Taxi company. Yandex is the largest internet company in Russia, the Google of Russia. It owns a ride-hailing service as one of its subsidiary. The subsidiary is the company that merged with Uber Russia. Uber owns 36.6% of this combined entity.
Exchanged its Southeast Asia operation for 27.5% stake in Grab
On 26 march 2018, Uber sold its SEA operations to Grab for a 27.5% stake in Grab. Grab will take over Uber's ride hailing and food delivery business.
There is this underlying person behind the scene that not many of you may know, Japan's richest man - Masayoshi Son, founder of Japan's SoftBank Group (and no, it is not actually a bank, and FYI again, he's Korean and not Japanese). SoftBank invested in many ride-hailing startups around the world. Just to name you a few, he invested in Didi Chuxing, Grab, Ola (India), 99 (Brazil startup that was recently bought by Didi) and recently Uber. Just to make things look a little more interesting, here is what SoftBank owns.
- US Sprint Corporation (83%)
- Yahoo! Japan (43%)
- Alibaba Group (29.5%)
- Nvidia (4.9%)
- Flipkart (23.6%) - India's e-commerce
- ARM Holdings (100%) - the company that makes your smartphone chip
- A ton of other startups beside ride-hailing companies.
This is what SoftBank owns outright. But its effective ownership in many companies are more than what is stated. That is because Alibaba also invests in tons of other startups, many of which overlaps with SoftBank's own investments. This significantly increases the effective ownership SoftBank has over these companies.
Is it possible for this to be the last merger in the ride hailing business scene? Probably not. There are probably going to be a lot more mergers as companies start to consolidate, merge, and partner up in order to compete with other startups and to reduce the rate they burn their capital. SoftBank will probably also push for more of such deals since less loss-making = more profit-making, which will increase the value of its investments.
I think the most important question thus far is: Will I still be getting my weekly dose of promo codes and discounts for rides? Probably not :(
Remember to offer your opinions. I
f you don't put your two cents in, how can you expect to get change?Have a feedback? Tell us now! Subscribe to us or
Follow us: InvestmentStab on Facebook
Click here to read the full article