Japanese SoftBank Group has committed to investing billions of dollars into ride-hailing company Uber. This move opens up a whole new possibility for the two companies to work and expand Uber’s market into the already tough and rapidly growing business across Asia. This statement was made by an insider of the company.
Earlier this month, Uber stated that it had agreed to some investment from a consortium led by SoftBank and Dragoneer Investment Group. The deal will see the group pump in $1 billion-$1.25 billion dollars into the taxi company, with the option to purchase around 17% of the existing shares in a secondary transaction.
SoftBank hasn’t limited its investment to only Uber, with the Japanese company also investing in Uber’s rivals across Asia, with Grab, China’s DiDi Chuxing, and India’s Ola amongst them. The company is working in line with the vision of the founder as they aim to be a part of the future that is fully controlled by AI and interconnected devices.
At the moment, taxi-hailing companies have been locked in fierce competition in Asia, with companies looking to attract both riders and drivers. The competition is to the advantage of the riders as with discounts and promotions are offered endlessly, even though this affects the profit margins of such companies.
A source close to the ride-hailing company Grab in Singapore stated that “SoftBank will play a consolidating role. SoftBank as a board director in both companies (Uber and Grab) would fundamentally change the conversation.”
When contacted, SoftBank and Grab declined to make a comment on the issue.
Uber currently has a market valuation of $68 billion, making it the most highly valued venture-backed company in the world. Even though this sounds very high, it was achieved at a great cost even though the firm insisted that it was necessary in order to build itself and venture into new markets.
The source close to Grab further stated that, “Doing a deal and combining the two businesses in Southeast Asia makes a ton of sense. He (Uber’s CEO) cuts his losses and gets a stake in the business that is from his perspective more than just ride-sharing.”
At the moment, it still hasn’t been established if SoftBank has discussed or proposed any deal with Grab with Uber’s directors. This is because the deal between the two companies hasn’t been concluded yet.