Giles overnight came news that uber the
ride-hailing app has secured a three and
a half billion dollar investment from
Saudi Arabia's wealth sovereign wealth
fund let's start by asking and why on
earth does ubben need this money I
thought it was swimming in cash as it is
it does have a lot of cash and boy does
it need a lot of cash I mean if you look
at its figures it's growing at rates
that are very hard to get your head
around I mean we only know a little bit
about it because it's a private company
the sort of figures we have a subject
come from a leak but effectively its
first half revenues for last year were
way more than the whole of the year
before so growing up over a hundred
percent but still burning cash so the
only reason it has a whole load of cash
is for a private company and this is one
of what the features that makes it
really interesting it's raised a huge
amount of money in private placements so
there's three and a half billion adds to
something like nine or ten billion or
more that's already being raised
privately and is valuing it at sixty
billion dollars so far already so it
needs that cash because it's currently
still at that growth phase that means
you burn a lot of it in investing in new
growth in new cities every all the time
and it hasn't yet reached that point of
turning a profit as it were okay well in
the old days of course company if you
wanted wanted a load of cash from the
investors you go to a stock exchange to
get it presumably an IPO is not on the
cards here is that because they don't
want to IPO they want to remain a
private company or is it because they
don't have the profits yet to tell a
compelling is the only thing I mean not
having profits hasn't mean didn't put
off Amazon a long time ago but then
whenever they scored this sort of poor
cash figure they they kind of got
worried amazon so uber seems to have an
unusual degree of confidence that it can
keep going as a private company in this
kind of state is it unwilling to go
private public yeah absolutely I mean
partly they've seen the sort of hassle
you get when you become a public company
you get subject to more scrutiny and
uber is arguably even more controversial
than the precedence that's looking at
like Facebook wherever it goes wherever
it tries to grow it tends to attract
regulatory scrutiny protest from local
incumbents the taxi companies it's
competing against so it's probably
thinking we will have an easier time if
we can raise cash at this rather
handsome valuation but keep away from
all of that scrutiny and of course it
avoids the hassle of
external investors as well so if you're
a if you're a netflix or a Tesla Motors
and you've constantly got people on your
case about your profits and your cash
flow uber avoids all that by by staying
private and that's a huge amount of
chief executive time yeah and what about
for the for the Saudis I mean Saudis
famously trying to diversify their
economy away Oh from from heavy oil
dependence where does it what does it
fit into the scheme of things for them
well uber as a service is incredibly
popular in Saudi Arabia partly because
women are not allowed to drive seventy
to eighty percent of uber users in Saudi
Arabia are women and so it's growing
quite fast there this is another
advantage from ubers point of view Saudi
Arabia investing three and a half
billion in this company means they know
they're not going to get regulatory
problems there it's going to remain a
popular service as for Saudi Arabia
changing their economy this way well of
course it has a new economy stick to it
compared to the old oil based economy
they are whether they actually gain any
particular technological advantage by
having the investment I'm not so sure if
it turns out to be profitable and makes
a huge amount of money then the 60
billion valuation if it matches what
Facebook did that might double or triple
so a great investment from the financial
point of view I struggle to see how
Saudi Arabia's basic economy becomes
less all dependent just because they've
made a good punt on a ride-sharing app
there Charles thanks very much thank you
you