Singapore’s ComfortDelGro picks 51% stake in Uber’s car rental unit for $218m

Photo: Bloomberg

ComfortDelGro Corp., Singapore’s largest taxi operator, on Friday announced it is buying a 51 per cent stake in Uber Technologies Inc.‘s car rental unit in Singapore for S$295 million ($218 million) and forming a joint venture with the ride-hailing giant.

Uber will retain the remaining 49 per cent stake in Lion City Holdings Pte Ltd, its wholly-owned car rental subsidiary in Singapore. The subsidiary operates Lion City Rentals which has a fleet of about 14,000 vehicles.

Valued at about S$642 million ($474.3 million), with a cash consideration of S$295 million ($217.9 million), it ranks as ComfortDelGro’s single largest deal to date.

ComfortDelGro lost an estimated $370 million – or about 11 per cent of its market value – in four months as investors lost patience regarding the planned transaction with Uber. It first announced the potential alliance more than three months ago.

Following the alliance, ComfortDelGro’s taxi drivers will be able to receive ride requests on the Uber driver app, while users of the Uber app will get an opportunity to directly book a ComfortDelGro taxi.

“The transaction is expected to result in increased demand for both private hire and taxi drivers as well as increased choice, shorter waiting times, and greater reliability for consumers,” ComfortDelGro said in a statement.

According to a media release, the two companies are finalising additional partnership opportunities and will make further announcements in the upcoming months.

In a statement, ComfortDelGro Chairman, Lim Jit Poh, said, “ComfortDelGro has been in the taxi business for close to five decades and we have seen the industry evolve significantly. Despite the many changes that have taken place, taxis have remained a relevant option for people get around the city. The question many have been asking is: For how long?”

Commenting on the agreement, Brooks Entwistle, Uber’s Chief Business Officer for Asia Pacific, said, “This strategic collaboration is good news for our two companies, it is also great for riders, drivers and for Singapore.”

Southeast Asia has become one of the toughest battlegrounds for Uber as it faces stiff competition from Singapore-headquarter Grab, its biggest rival in Southeast Asia, and Indonesia’s Go-Jek.

The two Southeast Asian unicorns have amassed massive funding to take on their Western rival. In July, Grab raised $2 billion in funding from Didi Chuxing, which outmanoeuvred Uber in China, and SoftBank. Go-Jek, on the other hand, received funding from China’s Tencent and JD.com as part of its latest round believed to be worth around $1 billion.

Japan’s SoftBank, which backs other Uber rivals such as Ola in India, is leading a group of investors that has made a multi-billion dollar tender offer to buy Uber shares from its existing shareholders. The offer, believed to be 30 per cent below what investors paid in Uber’s last funding round in 2015, is considered low by many.

Uber’s rivals in Southeast Asia are unfazed. Asked about SoftBank’s planned Uber investment, Go-Jek CEO Nadiem Makarim told Bloomberg he was not worried at all.

“Uber has been sidelined in Indonesia and much of Southeast Asia. We learned early on with Grab it’s not about who has the most money; it’s about who innovates faster,” he added.

Also Read:

Singapore taxi firm ComfortDelGro loses 11% of its value waiting for deal with Uber

Singapore’s top taxi firm ComfortDelGro in alliance talks with Uber

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

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  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.