Uber can’t pluck money out of the trees anymore — so it’s drilling for it in the Persian Gulf.
Scrambling for cash as it ramps up an unexpectedly fierce battle in China, the San Francisco-based ride-hailing app said Wednesday it has raised $3.5 billion from Saudi Arabia’s Public Investment Fund.
The giant tide of oil money — which led critics to point out that Saudi Arabia doesn’t even allow its female citizens to drive represents the largest single slug of cash that Uber has secured in a string of deals that now total more than $11 billion.
After the surprise deal, the Saudi sovereign fund will own about 5 percent of Uber, and its managing director, Yasir Al Rumayyan, will join Uber’s board.
“We look forward to partnering to support their economic and social reforms,” Uber Chief Executive Travis Kalanick said in a statement.
The cash infusion came as US financial firms like Morgan Stanley and Merrill Lynch have lately struggled to raise relatively piddling amounts for Uber — well below $1 billion in total — from high-net-worth investors, according to sources close to the negotiations.
Indeed, the massive Saudi cash infusion, which values Uber at $62.5 billion, caps a $5 billion “Series G” round that Uber began last year and accounts for the lion’s share of it.
Other recent Uber investors have included Tiger Global and T. Rowe Price, who together ponied up $1 billion, and more recently Toyota, which is said to have made a smaller investment in a strategic partnership with Uber.
“They obviously had to get creative to get it done,” one insider said of Uber’s fundraising efforts, noting that the company’s sky-high valuation has become a tough sell for US investors.
“Uber decided over the course of the last six months that they needed way more money than they thought they needed,” according to a source. “Market-share battles can get ugly, ugly, ugly.”
Already worried about the rising costs of Uber’s effort to grow its China business, high-net-worth clients of Morgan Stanley and Merrill balked at making an investment a decision solidified after they were given “no information, no financials” from Kalanick’s company, the source added.
While Uber had initially aimed to raise $2 billion in Series G financing, sources said the figure ballooned to $5 billion in recent months as the stakes have escalated in China.
Last month, Apple revealed a $1 billion investment in Chinese ride-sharing app Didi Chuxing a signal of Apple’s ambitions to compete not only in China’s ride-hailing market, but also, like Uber, in the future of self-driving cars there.
