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Careem to raise half billion dollars to fund expansion plan

Careem plan

Abu Dhabi, (Business News Report)|| Careem aims to raise half a billion dollars from Gulf investors and sovereign funds, to finance its expansion plan that aims at providing new transport services.

Careem is a subsidiary of Uber, and is headquartered in Dubai, where talks are currently underway with the Saudi Public Investment Fund and the ADQ Holding in Abu Dhabi to obtain the required funds do the plan.

According to people familiar with the matter, Bank of America is advising on the deal.

They noted that the talks are at an early stage, so the final value of the funding process may change, and more funders may join.

Careem, Uber and Bank of America declined to comment, while Saudi Arabia’s Public Investment Fund and ADQ were not immediately available for comment.

Uber fully acquired Careem in 2019 for $3.1 billion in a landmark deal for the region’s startup sector. Despite this, the two companies operate largely independently.

Founded in 2012, Careem is currently developing a super app that gives subscribers access to a wide range of services, including food delivery, grocery shopping, freight services and bike rental.

Most of these sectors have flourished during the Coronavirus pandemic. Research from Morgan Stanley and McKinsey indicates great growth prospects for high-end applications.

Uber, which shut down its food delivery service in the United Arab Emirates and Saudi Arabia two years ago, is focusing on serving passengers in both countries.

The money that Careem aims to obtain will also give it some independence from Uber, especially in terms of implementing its strategy by providing additional services outside of delivery. But this does not mean that the two entities sever their ties, even partially.

Careem reduced its workforce by a third during the Coronavirus, as demand for its passenger service decreased. But it has re-employed in its main market with the recovery of the economy.

The company recorded 4.1 million trips in 2020 and 4.3 million trips for the period from January to October 2021, according to the latest figures.

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