Uber raises $1.6B in convertible debt from Goldman Sachs

Global online car hire service major Uber Technologies Inc. has raised $1.6 billion in convertible debt from global investment bank Goldman Sachs' wealth management clients, according to a Bloomberg report. The funds will be used to expand its operations in more cities around the world, as well as for research and development (R&D), among others.

The report further mentioned that the financing is in the form of a six-year bond that will convert into equity at a 20-30 per cent discount to Uber's valuation at the time of an initial public offering (IPO).

This new round brings the total amount of funding Uber has raised till date to more than $4.3 billion.

Launched in 2009, San Francisco-headquartered Uber is one of the heavily-funded online car hire services in the world. The company enables users to request a ride any time using its iOS and Android apps, as well as from its mobile site m.uber.com. Uber is simply a booking platform, and the cars are not operated by the company.

Last month, Uber had secured $1.2 billion in fresh funding from a group of unnamed investors. According to report by The Wall Street Journal, New Enterprise Associates (NEA) and Middle East sovereign wealth fund, Qatar Investment Authority, had participated in that round. US-based Valiant Capital Partners and Lone Pine Capital had also co-invested in the round that valued Uber at $40 billion.

Interestingly, Chinese search engine major Baidu Inc. is also in talks to infuse $600 million in the web-based car booking services firm for a minority stake.

In July 2014, the company had closed $1.2 billion in funding from institutional investors, mutual funds as well as PE and VC investors at $17 billion pre-money valuation. The investors who participated in that round included Fidelity Investments, Wellington Management, BlackRock Inc, Summit Partners, Kleiner Perkins, Google Ventures, and Menlo Ventures. Previously, Uber had raised over $361.2 million in funding led by Google Ventures, which put in $258 million.

Uber in India

The company started its operations in India in October 2013 and is already present in 11 cities — Bangalore, Chandigarh, Chennai, Jaipur, New Delhi, Pune, Ahmedabad, Kolkata, Hyderabad, Mumbai, and Kochi.

Late last month, the Delhi transport department had modified the state Radio taxi scheme 2006 to bring the online car aggregators under the ambit of the scheme, paving the way for the likes of Uber to continue with its services in the state.

The state government had imposed a ban on mobile-based car hiring company Uber, following rape allegations against one of the drivers contracted to the firm last month. The Delhi government had also asked all cab services running without licences to be off the road. Following the incident, Uber had suspended its services in Delhi and tendered an apology.

Competition

In the cab booking segment in India, Uber competes with domestic players like Olacabs, TaxiForSure (backed by Accel Partners and Bessemer Venture Partners), Savaari, taxiGUIDE and Cabs24X7.

In October last year, Mumbai-based ANI Technologies Pvt Ltd, the company behind Olacabs, had entered into an agreement to raise $210 million (approximately Rs 1,260 crore) in its Series D round of funding from SoftBank Corp., with participation from existing investors Tiger Global and Matrix Partners India, besides Steadview Capital.

Early this week, Techcircle.in had exclusively reported that Ola is back in the market to scoop between $300-500 million more in funding. The company is likely to rope in at least two new investors including a New York-based fund besides a Hong Kong-based fund house, besides participation from most of its existing investors.