Uber Technologies Inc plans to unveil terms for its initial public offering on Friday. The ride-hailing company, according to Reuters, will reveal an IPO price range of between $44 and $50 per share, based on which it would raise between $8 billion and $9 billion. This would rank it as the largest IPO since that of Chinese e-commerce giant Alibaba Group Holding Ltd in 2014.
Uber insiders will also sell their own shares in the IPO.
The valuation sought is less than the $120 billion valuation that investment bankers told Uber last year it could fetch, and closer to the $76 billion valuation it attained in its last private fundraising round last year.
Uber’s moderation of valuation expectations reflects the poor stock performance of its smaller rival Lyft Inc following its IPO last month. Lyft shares ended trading on Thursday down 22 percent from their IPO price amid investor skepticism over its path to profitability.
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Uber also plans to unveil on Friday its last sale of stock as a private company. PayPal Holdings Inc plans to invest $500 million in a concurrent private placement at Uber’s IPO price, a person familiar with the matter told Reuters. The deal includes a partnership to expand PayPal as a payment option for Uber rides to most of the 70-plus countries where Uber operates.
The PayPal investment was first reported by the Wall Street Journal.
In addition, Uber and PayPal will collaborate on digital payment solutions, including the expansion of Uber’s digital wallet such that customers could, for instance, use it for purchases other of an Uber ride, the person said.
The development of a more robust digital payments service could accelerate Uber’s ambitions to become a “superapp” for a variety of logistics and transportation services, and give the company more opportunities in underbanked regions such as Latin America.
Southeast Asia’s ride-hailing company Grab, for example, has built out a line of financial services, including loans and insurance, to accelerate its growth in the region.
PayPal’s investment and collaboration are contingent upon Uber completing its IPO.
The investor roadshow will kick off in earnest on Monday, setting the stage for Uber to debut on the New York Stock Exchange in early May.
For the roadshow, Uber’s top executives will travel the Unites States and make a stop in London to drum up investor interest in the IPO, sources said.
The price range was reported earlier by Bloomberg News.
In addition to ride hailing, Uber’s business includes bike and scooter rentals, freight hauling, food delivery and an expensive self-driving car division.
The ride-hailing company has disclosed it has 91 million users, but growth is slowing and it may never make a profit. Uber in 2018 had $11.3 billion in revenue, up around 42 percent over 2017, but below the 106 percent growth the prior year.
During the IPO roadshow, Uber’s chief executive, Dara Khosrowshahi, will be tasked with convincing investors that he has successfully changed the company’s culture and business practices after a series of embarrassing scandals over the last two years.
Those have included sexual harassment allegations, a massive data breach that was concealed from regulators, use of illicit software to evade authorities and allegations of bribery overseas.
Uber is reserving some shares in the IPO for some of its most active and best-performing drivers, including those who have completed at least 2,500 trips.
Yetunde Adegoke
