Uber’s Careem seeks $500m from Abu Dhabi and Saudi funds

Uber Technologies’s Middle Eastern subsidiary is looking to raise as much as $500m from investors including regional sovereign wealth funds to help bankroll an expansion into services beyond ride-hailing, people familiar with the matter said.

Dubai-based Careem has held talks with Saudi Arabia’s Public Investment Fund and Abu Dhabi’s ADQ to raise the funds, the people said, asking not to be named because the information is private. Bank of America Corp. is advising on the transaction, they said.

Talks are at an early stage, so the final amount might still change and more funds might join, the people said. Careem, Uber and Bank of America declined to comment, while ADQ and PIF weren’t immediately available to comment.

Careem was acquired by Uber for $3.1bn in a landmark deal for the regional startup sector in 2019. Despite Uber’s full ownership and a degree of cooperation, both companies operate relatively independently.

Founded in 2012, Careem is now building out a subscriber-based Super App allowing access to services including food delivery, grocery shopping, shipping and bike rentals. Some of these sectors boomed during the pandemic, and research from Morgan Stanley and McKinsey points to significant growth prospects for Super Apps.

Uber, which shut down its own food delivery service in the UAE and Saudi Arabia two years ago, is focused on ride hailing in the country. Meanwhile, Careem is aiming to become the first Super App in the Middle East, though a rollout will require additional funding.

The money will also give Careem an additional degree of autonomy from Uber in pursuing its own non-ride hailing strategy in the region but it doesn’t mean the two entities are cutting ties, even partly, the people said.

Careem reduced its workforce by a third during the pandemic as demand for rides plummeted. In its home market, however, it’s hiring again as the economy rebounds – the company logged 4.1 million rides in 2020 and 4.3 million from January to October 2021, according to most recent figures.