Global transportation company Uber said on Wednesday it is getting a massive $3.5 billion cash infusion from Saudi Arabia, the largest single investment ever made in a private company.
As well as the country’s sovereign investment fund - known as the Saudi Arabian Public Investment Fund (PIF) - investment, and will get a seat on Uber’s board of directors. Uber has operated in Saudi since early 2014.
The stake is the first made by the fund, which was one of the key parts of Saudi's 'Vision 2030' rollout in April. The fund's target is to reach $2 trillion in investments, to help diversify the oil-rich kingdom's revenues.
Uber, a private firm, has an estimated value of between $51-61 billion. Saudi’s fund is likely hoping for a large payout when – or if – Uber goes public.
Yasir al-Rumayyan, the Saudi Arabian Public Investment Fund’s managing director, said in a statement that the “plan presents a number of goals, including unlocking strategic sectors such as tourism and entertainment, boosting employment opportunities and women’s participation in the workforce, and encouraging entrepreneurship.”
Funding for new tech companies has been slowing down in recent months amid concerns that many startups have been over-valued. But San Francisco-based Uber has been able to raise billions of dollars as it pursues ambitious plans to expand around the world.
Uber says its internet-based ride-hailing service now operates in nine countries of the Middle East, one of its fastest growing markets. Eighty percent of its passengers in Saudi Arabia are women, who are banned from driving in the conservative kingdom.
The Saudi money is part of a larger round of funding by several investors, which valued Uber at $62.5 billion. The company, which has raised well over $14 billion since its founding in 2009, says it now has more than $11 billion in cash and available credit to fund its expansion.
Uber’s regional rivals have also reported big investments this year, as on-demand ride services have grown in popularity. Apple recently invested $1 billion in China’s Didi Chuxing, while General Motors has put $500 million into US-based Lyft.
The purchase could appear to give the company an edge of its main rival, Careem, a regional firm that operates in eight cities in Saudi.
Careem said in a statement to Al Arabiya English that the firm was “excited to see a prominent local government invest in a technology company.” In November, investment giant Abraaj Capital bought a $60 million stake in the firm.
“Competition is not new to us, and we believe it gets the best out of us for the advancement of the region,” Careem’s statement added.
“Our experience in Saudi Arabia is a great example of how Uber can benefit riders, drivers and cities. We appreciate the vote of confidence in our business and look forward to partnering with the kingdom to support their economic and social reforms,” said Travis Kalanick, CEO and co-founder of Uber.
Uber currently operates nine countries and 15 cities across the Middle East and North Africa. In Saudi Arabia, Uber serves Riyadh, Jeddah, Makkah, Madinah and the Eastern Province.
(Ismaeel Naar contributed to this report)SHOW MORE