DUBAI, United Arab Emirates – Uber-owned ride-hailing service Careem announced Monday a spinout with major backing from a new source, as well as from its parent company.
Tech holding company e&, formerly Etisalat, based in Abu Dhabi in the United Arab Emirates, signed a binding agreement with Uber Technologies to acquire a 50.03% majority stake in the spinout – which will be known as Careem Technologies – with a $400 million investment.
Careem’s ride-hailing business remains fully owned by Uber, which acquired it for $3.1 billion in 2019. Uber’s stake in the spinout is currently undisclosed.
Careem Technologies will focus on the growth of the company’s “super app,” which offers dozens of services beyond ride-hailing in one app. Some of those services include Careem Quik grocery delivery in 15 minutes or less, food delivery, PCR test booking, digital payments and remittance transfers, bicycle rentals, laundry and cleaning services, and event ticket booking.
“The non-ride services that are Careem-owned and operated today will be owned and operated by Careem Technologies in the future,” a spokesperson for Careem told CNBC. Services offered by third-party partners, like laundry service Washmen or events marketplace Tikety, will remain operated by those third parties.
Careem has emphasized Uber’s enduring role in the new entity. “Uber will continue to have a shareholding in the spinout, but the spinout will be independent with a different ownership structure,” the spokesperson said.
Asked why the creation of an independent entity was needed, the spokesperson explained that Uber being a publicly listed company meant there were restrictions on how new investment could come in.
“It wasn’t necessarily that we felt a spinout was required in any way, and I think Uber’s continued ownership stake in the spinout is a testament to their continued belief in the Super App vision and desire to be part of this journey,” he said. “But ultimately, I think, with Uber being a publicly listed company, there are only so many ways you can take new investment from a new party.”
With the nearly half-billion-dollar investment and majority stake in Careem Technologies from e& as well as ongoing support from Uber, Careem says it’s confident about the growth of its super app goals going forward.
“I am thrilled to partner with Careem, and welcome e&, as we grow the Careem super app to deliver more services to millions of people in this fast-moving part of the world,” Uber CEO Dara Khosrowshahi said in a statement.
Careem operates in more than 80 cities and 10 countries, according to its website. Established in 2012 by co-founders Mudassir Sheikha and Magnus Olsson, the company grew from a Dubai-based ride-hailing firm to a “Super App” platform, used across the Middle East from Morocco to Pakistan.
For e&, the investment is part of a broader strategy to expand from what was formerly a telecommunications company to a larger global technology and investments group. The CEO of e&, Hatem Dowidar, told CNBC in March 2022 that telcos, including e& predecessor Etisalat, “need to move out of the traditional telco model and move up the value chain.”
“We saw how the tech giants grew. We look now at their market caps and the returns they offer, and we feel jealous,” Dowidar said at the time.
Holding a majority stake in Careem Technologies appears to be in line with the company’s aim to increase and scale its consumer digital offerings.
“e& is investing $400m to become a majority shareholder in Careem’s Super App alongside Uber and all three of Careem’s co-founders,” a statement from e& said. The investment will significantly accelerate Careem’s goal to create “the first ‘everything app’ for customers across the Middle East,” the firm wrote.
Careem “expects significant synergies with e& and anticipates benefiting from e&’s large customer base” as well as its experience scaling tech businesses across a geographic area that both companies share, it added.Source: CNBC