Careem, Owned By Uber, Launches Spinoff With $400 Million Investment From E&T Tech Holdings

(CTN News) – Its parent company, Uber, and a credible source back Careem’s spinoff.

A $400 million investment by Abu Dhabi-based tech holding company e&, formerly Etisalat, will let Uber Technologies buy 50.03% of Careem.

Despite the acquisition of by Uber in 2019, Uber remains the sole owner of the company’s ride-hailing business. It is unclear what stake Uber has in the spinout.

In addition to ride hailing, Careem Technologies will grow its “super app,” which combines dozens of services in one application. Among the services offers are grocery delivery in 15 minutes or less, food delivery, PCR test booking, remittance transfer, bicycle rentals, laundry, and cleaning.

According to a spokesperson for Careem Technologies,

The non-ride services currently provided by Careem will be operated by the company in the future. There will continue to be third-party services offered by third-party partners, such as laundry service Washmen or events marketplace Tikety.

According to Careem, Uber will continue to play a significant role in the new company. In the spinout, Uber will maintain a shareholding, but the company will have a different ownership structure, according to the spokesperson.

A spokesperson explained that Uber’s status as a public company restricted how new investment could be made, hence the need to create a separate entity.

As a result, Uber’s continued ownership stake in the spinout indicates their commitment to the Super App vision and desire to be a part of it, he said. In the end, I think Uber cannot take new investment from a new party if it is publicly listed.”

As a result of e&’s nearly half billion dollar investment and a majority stake in Careem Technologies, along with ongoing support from Uber, is confident about its future growth.

“I am thrilled to partner with Careem, and I welcome E&, as we grow the super app to provide more services to millions in this fast-moving region,” Uber CEO Dara Khosrowshahi said.

According to its website, Careem operates in more than 80 cities in 10 countries. Founded in 2012 by Mudassir Sheikha and Magnus Olsson in Dubai, the company turned into a “Super App” platform used throughout the Middle East from Morocco to Pakistan.

As part of e&’s strategy to expand from a telecommunications company into a global technology and investment group, the investment is part of a broader plan. According to e& CEO Hatem Dowidar, telcos, including e&’s predecessor Etisalat, “need to move up the value chain and move out of the traditional telco model.”

“We saw the growth of the tech giants. Dowidar said at the time that he was jealous of their market caps and returns.

Careem Technologies’ majority stake appears to be aligned with the company’s aim to expand its consumer digital offerings.

“E& will invest $400m to become a majority shareholder in Careem’s Super App alongside Uber and its three co-founders,” the company announced.

According to Careem, the investment will accelerate its efforts to develop “the first ‘everything app’ for customers in the Middle East.”

In addition, Careem will gain from e&’s large customer base and its experience scaling tech businesses across a geographical area they both share, the company stated.

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