Uber and Singapore taxi firm ComfortDelGro in $474m joint venture
Uber and Singaporean taxi firm ComfortDelGro are forming a joint venture in what looks like a boost for the US ride-hailing company’s Southeast Asia business.
The deal announced today will see ComfortDelGro acquire a 51 percent stake in Lion City Rentals (LCR), Uber’s subsidiary in Singapore that leases cars to drivers.
According to a joint statement put out by the two companies, the transaction is worth about US$474 million, of which US$218 million is in cash. This makes it ComfortDelGro’s biggest deal to date.
The partnership will allow LCR to leverage on ComfortDelGro’s fleet management and operations capabilities. Uber users will be able to directly book ComfortDelGro cabs via the US company’s app, while the taxi firm’s drivers will be able to accept ride requests through it, giving them an additional source of income.
“We are confident that taxis will be around for a long time to come. But we are also aware that the personalized mobility business is a very different one now,” ComfortDelGro chairman Lim Jit Poh said in the statement. “[Private hire vehicles], with the advent of innovative apps like Uber, have changed the way in which consumers use public transportation and have created a more efficient use of existing resources. By working together, we feel that we will be able to unleash a lot of synergy which will benefit consumers and drivers alike.”
The deal appears to be something of a coup for Uber, which has faced ferocious opposition from licensed taxi providers in Southeast Asia and other parts of the world – as alluded to by Lim – as well as strong competition from local ride-hailing players like Grab and Go-Jek.
Last month, Uber CEO Dara Khosrowshahi said that he didn’t expect the US company’s Southeast Asian business to be profitable in the near future.
“The economics of that market are not what we want them to be,” he said at The New York Times DealBook conference. “I think it’s over-capitalized at this point. We’re going in, and we’re leaning forward. But I’m not optimistic that market is going to be profitable any time soon.”
LCR was at the center of a storm earlier this year when leaked documents and emails indicated the subsidiary knowingly leased out defective cars, one of which caught fire while on the road.
Converted from Singapore dollar. Rate: US$1 = S$1.35.
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