In what could turn out to be a watershed movement for Uber, the American ride-hailing giant on Monday officially confirmed that it has agreed to sell its Southeast Asian business to regional rival Grab. The deal marks Uber’s latest retreat from a highly lucrative international market and also ends months of speculations that preceded this high profile deal.
As per the deal, Uber will end up getting 27.5 percent stake in the Singapore headquartered company in return of selling its business. The deal also paves way for Uber’s incumbent CEO Dara Khosrowshahi to join Grab’s board of director team.
The retreat from Southeast Asian market is Uber 8th exit from an international market. The latest exit will add to Uber’s strategy to trim down its ballooning losses and seek higher valuation before its IPO hits the market early next year.
However, it is equally important to note that Uber’s latest exit was largely owing to SoftBank, which became the largest stakeholder in the ride-hailing giant earlier this year. SoftBank, which is also the largest shareholder in Grab, is believed to be the reason for Uber to expedite its exit from the Southeast Asian market.
Most Industry experts claim that SoftBank wants Uber to exit all its loss-making markets and divert all its focus only on those markets where it is making genuine profit. This mainly includes the U.S. market and European market. The SoftBank’s raison d’être for this strategy is to obviously give Uber a better leveraging position before its public issue next year.
Will Uber now Exit the Indian market?
After surrendering Chinese market to Didi Chuxing and now Southeast Asian market to Grab, will Uber follow the same recourse for the Indian market as well? This is the question that most experts back in India are now trying to find an answer to.
After agreeing to sell its Southeast Asian business, India is now the only jewel that has been left in Uber’s Asian crown. However, this jewel is not in a very safe position either as it is facing cutthroat competition from regional rival Ola.
Interestingly, SoftBank is again the largest investor in Ola, which has actually triggered the rumors that India might be the next on SoftBank’s exit list. But Mr Khosrowshah, who was in India last month, claimed that the company is not planning to exit from India.