SoftBank funding may spur Uber to re-think tough Southeast Asian market

SINGAPORE: SoftBank Group´s multi-billion dollar investment in Uber Technologies Inc opens up the possibility of combining it with other ride-hailing assets the Japanese group owns in a consolidation of a rapidly growing business across Asia, industry sources say.
Uber Technologies Inc said on Nov. 12 that a planned deal with a consortium led by SoftBank and Dragoneer Investment Group was moving forward. The consortium plans to inject $1 billion to $1.25 billion into Uber, and buy up to 17 percent of existing shares in a secondary transaction.
SoftBank has also been a big investor in Uber´s rivals across Asia, including Southeast Asia´s Grab, China´s DiDi Chuxing, and India´s Ola, as it works to achieve founder Masayoshi Son´s vision of a future driven by artificial intelligence and interconnected devices.
At the same time, ride-hailing companies have been competing fiercely across Asia to attract both riders and drivers, with discounts and promotions that have driven down profit margins.
"SoftBank will play a consolidating role," said a source close to Singapore-based Grab." SoftBank as a board director in both companies (Uber and Grab) would fundamentally change the conversation.
"The source declined to be named due to sensitivity of the subject. SoftBank and Grab declined to comment for this story. At $68 billion, Uber is the most highly valued venture-backed company in the world.
But the lofty valuation has come at the cost of a heavy hit to Uber´s bottom line, which the firm has said was necessary to establish itself in new markets. "Doing a deal and combining the two businesses in Southeast Asia makes a ton of sense," said the source close to Grab.
"He (Uber´s CEO) cuts his losses and gets a stake in the business that is from his perspective more than just ride-sharing," the source said, referring to Grab´s foray into other markets for digital or cashless payments. Any deal will likely be similar to the one Uber struck with DiDi last year, in which it took a stake in the Chinese company and pulled out its own business, the source said.