The two rivalling US-based ride hailing platforms Uber and Lyft, both counting many corporates among their backers, are preparing to float on public markets in the coming weeks, with the
valuations of the two combined likely to stand well above $100bn
US-based ride hailing service Uber has disclosed plans to file for its IPO in April 2019. Uber has so far raised more than $13bn from investors, which included carmaker Toyota, telecoms firm SoftBank, its China-based peer Didi Chuxing, software provider Microsoft, internet company Baidu, media groups Axel Springer and Bennett Coleman & Co, as well as GV, a corporate venturing subsidiary of internet conglomerate Alphabet. Uber’s backers also include financial services firms Fidelity and Goldman Sachs.
In addition, recent reports suggest a consortium, including SoftBank’s Vision Fund and Toyota, is in advanced talks to invest at least $1bn in Uber´s self-driving car subsidiary. The autonomous car unit has been running since 2015 but reportedly been losing $20m per month without completing a commercial product. Uber is also in advanced discussions to acquire Careem, its United Arab Emirates-based counterpart backed by several corporates, reportedly for $3bn in cash and shares. This would not be the first strategic M&A transactions for Uber. In 2017, it merged its operations in Eastern Europe with Yandex Taxi, a ride hailing subsidiary of Russia-based internet company Yandex.
Founded in 2009, Uber runs an on-demand ride service that is the market leader in several countries around the world including the US. It also operates a food delivery service called UberEats, among other services subsidiaries. The company made a reported $11.3bn in revenue in 2018, but recoded a $3.3bn net loss, not taking into account the proceeds from its sales of subsidiaries in Southeast Asia and Russia.
Uber´s US-based rival Lyft also announced its IPO and officially filed, setting the terms for it. The flotation is expected to raise almost $2.1bn if the company floats at the top of its range. The IPO will involve almost 30.8 million shares issued on the Nasdaq Global Select Market priced between $62 to $68 each. The expected total valuation of the IPO is $22.9bn. Previous corporate backers of Lyft include Alphabet, e-commerce firms Rakuten and Alibaba, carmakers GM and Jaguar Land Rover, its peer Didi Chuxing, automotive parts maker Magna and holding company Icahn Enterprise.
Lyft’s ride hailing platform served 30.7 million riders in the US and Canada in 2018 and was responsible for roughly $8.1bn in bookings. It doubled revenue to approximately $2.16bn in 2018, though its net loss increased from $688m to $911m over that period.
Both Uber and Lyft raised their first corporate-backed rounds in 2014, i.e. it has taken the two companies nearly 5 years to go to public. This is in line with the average time for corporate backed companies, as GCV Analytics data suggest, summarised in the graph here. From 2015-16 onwards, the time required to reach an IPO since the first known(disclosed) corporate-backed rounds has doubled from an average of 2.1 year to 4.89 years.
This extra time to stay private does not mean that corporate-backed companies stay idle on the investment side. According to GCV Analytic estimates, in China, for example, nearly a quarter of all unicorns are engaged in some form of minority stake investing. In the case of Uber and Lyft, the former has been more active than latter, which is only known to have absorbed the team of US-based livestreaming app developer Kamcord, which shut down in 2017.
Uber, however, has been more active in taking minority stakes in startups. It participated in the $335m round raised by US-based electric scooter rental service Lime, where it co-invested with Alphabet and other corporates. It also took an an equity stake of undisclosed size in US-based mobile car buying platform Fair.com as part of a deal that involved Fair acquiring Uber’s India-based vehicle leasing business, Xchange Leasing. Earlier, Uber had also supported 1st Consult Technologies, an India-based operator of ambulance location and hailing platform Ambee, with an undisclosed amount. Uber had also invested $30m in the India offshoot of its car leasing subsidiary Xchange Leasing. In 2015, it acquired US-based geospatial data and navigation system provider DeCarta, giving an exit to telecoms company Deutsche Telekom and retail chain Best Buy.