Bengaluru: Cab hailing service Uber India will be one of the biggest benefactors of the massive $5 billion raised by its parent company in the US, as it looks to overtake local rival Ola in one of its largest markets globally.
Uber Technologies Inc, the world’s most valuable venture-backed company, said on Thursday it received $3.5 billion from Saudi Arabia’s Public Investment Fund, part of a $5 billion round, the biggest-ever single funding amount raised. Uber’s post-money valuation is close to $68 billion, The Wall Street Journal newspaper reported.
For its Indian arm, the investment means more firepower in its quest to overtake Ola (ANI Technologies Pvt Ltd) with which it is locked in a close, often bitter market share battle.
India is the most important market for Uber, which is present in 461 cities globally, after US and China. The importance of India is only likely to increase for Uber this year.
While the company dominates its home market, it is struggling to gain ground on Didi Kuaidi in China. Didi, which is also a strategic investor in Ola, itself raised $1 billion from iPhone maker Apple Inc last month.
If Didi continues to win by a significant margin in China, India may become for Uber what is for another American tech giant Amazon: a market it cannot afford to lose.
In December, Ola, Didi and two other international cab-hailing services, US-based Lyft and Singapore-based GrabTaxi, entered a global ride-share agreement to take on common enemy Uber, which wants to dominate urban transportation across the world.
While the global alliance hasn’t translated into any meaningful change in business for any of the four companies, the sheer amount of funds raised by Didi over the past 18 months—more than $4 billion—gives the company significant firepower to fund peers such as Ola, which is scrambling to keep Uber at bay in India.
Uber’s $5 billion round will ensure that the company has sufficient cash to take on the alliance and potentially outspend rivals apart from Didi.
The round may increase pressure on Ola to refill its coffers. Ola has so far raised $1.2 billion from Didi, SoftBank, Tiger Global Management, DST Global, Matrix Partners and others since it launched in 2011.
In July 2015, Uber had pledged to pump in $1 billion into India. It’s not clear if the company has exhausted the amount yet. Uber didn’t immediately respond to an email seeking comment.