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Uber in China

Despite billions in high-profile investments, Uber is facing pressure for an IPO to generate returns for shareholders, as its fundraising hits a plateau. Uber announced that it was selling its China operation to DidiChuxing, ending an uphill battle in a country where investors were hesitant of Uber’s success. “Chinese investors, [venture capitalists] and funds would have certainly been keen to invest into Uber Technologies but not solely Uber China,” said Matthieu David of China-based research firm Daxue Consulting.

Uber’s fundraising

In other regions, Uber’s fundraising ability is still viable but it is unlikely that Uber’s share price and valuation will keep rising with the current momentum. The most recent US$3.5 billion investment from a Saudi Arabian public investment fund barely impacted Uber’s US$62.5 billion valuations. Last month Uber turned to high-yield loans, not issuing shares, to raise another $1 billion. Another $1 billion from Didi as part of its takeover of Uber China will come soon, raising Uber’s lifetime fundraising haul above $12 billion.

Removing China from its operations leaves an easier pitch to sell to investors if Uber goes public. It still faces regulatory issues such as the level of background checks for drivers and whether drivers can be classified as contractors rather than employees. Nonetheless, Uber is poised to dominate as much as two-thirds of the world market for driverless taxis.

See also:

• Mobility is changing for the car-hailing service market in China
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Photo source: Techinasia.com