Uber Board Seats for SoftBank Imperiled by US National Security Review

When SoftBank Group arranged a $9 billion (roughly Rs. 62,000 crores) purchase of Uber Technologies stock in late 2017, the company negotiated …

When SoftBank Group arranged a $9 billion (roughly Rs. 62,000 crores) purchase of Uber Technologies stock in late 2017, the company negotiated for two seats on the board. Since then, foreign investment in the US has come under heightened scrutiny. Those spots were never filled, and there’s a good chance they never will be.

The Japanese technology conglomerate will lose its claim to those board positions when Uber goes public, people familiar with the matter said. At that time, the company’s bylaws will change, erasing old agreements like the one it had with SoftBank.

The reason for the holdup: SoftBank has yet to secure approval from officials who review deals between American companies and foreign investors. Although the massive investment in Uber was completed and the money was wired more than a year ago, SoftBank spent most of last year sorting through its own accounting and investor approvals of the investment, a person familiar with the process said.

SoftBank didn’t initiate the US review process for the board seats until late last year and still hasn’t formally filed with the Committee on Foreign Investment in the US, the inter-agency panel known as Cfius that reviews corporate deals for national security risks, the person said.

The initial public offering, which seemed like a faraway prospect when the deal was made, is fast approaching. Uber will file a public prospectus as soon as Thursday and start its IPO road show later this month, said people familiar with the plans, who asked not to be identified because the information are private. It’s seeking to raise about $10 billion (roughly Rs. 70,000 crores) and would begin trading next month.

With the board seats in jeopardy, SoftBank would lose its ability to influence the direction of the world’s largest ride-hailing operator. The episode highlights the uncertainties for overseas investors doing business in the era of President Donald Trump. The status of SoftBank’s Cfius submission and the potential for the firm to lose its claim to the Uber board haven’t been previously reported. Spokesmen for SoftBank and Uber declined to comment. Cfius doesn’t comment on its reviews.

Cfius is a powerful and secretive body run by the Treasury Department. It gained expanded authority last year and pays particular attention to deals involving technology companies and those that control data on US citizens. Cfius can impose conditions on a deal or recommend to the president that a transaction be blocked. Often, companies unable to address the committee’s concerns abandon their acquisitions rather than go to the White House.

The panel played a key role in Trump’s decision last year to terminate what would have been the largest technology deal in history, the takeover of San Diego’s Qualcomm by Singapore’s Broadcom Ltd. In a smaller instance reported recently, Cfius told the Chinese owner of Grindr, a gay dating app based in California, that the relationship is a national security risk. The parent company is now looking for a buyer, according to Reuters. The committee also voiced concerns about Chinese ties to a social network that connects people with similar health conditions, and the owner is holding a “fire sale” of the assets, CNBC reported.

SoftBank is no stranger to the Cfius process. It won approval from the panel to buy Sprint and UK chip designer ARM Holdings. But the committee put conditions on its ownership of Sprint and restricted control of Fortress Investment Group when SoftBank bought the alternative-asset manager.

In the case of Uber, SoftBank needed to get approvals from its own investors first. The company took ownership of its sizable Uber stake in January 2018. Then it underwent a process to transfer the shares from SoftBank’s corporate portfolio to the $100 billion tech fund it manages, called the Vision Fund. That wasn’t completed until late last year and was the primary reason for postponing a Cfius submission, a person familiar with the matter said.

The biggest backers of the Vision Fund are based outside the US, including those associated with the governments of Abu Dhabi and Saudi Arabia, as well as Foxconn Technology Group, the Taiwanese assembler of iPhones. SoftBank and its affiliated entities now own roughly 15 percent of Uber, making them the largest shareholder.

Even without SoftBank, Uber has a crowded board. There are currently a dozen directors, with several other seats yet to be filled. In an interview Tuesday on Bloomberg TV, SoftBank Chief Operating Officer Marcelo Claure said there’s “no hurry” for the company to take a place on the Uber board. “They already have quite a sizable board,” he said.

Directors could elect a SoftBank representative after the company goes public, but the nomination at that point would be subject to shareholder approval. Dara Khosrowshahi, Uber’s chief executive officer, has privately expressed other priorities. According to a person familiar with internal discussions, the CEO has said he wants to bring on more independent directors who aren’t executives or major shareholders.

© 2019 Bloomberg LP

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Lyft’s stock slide casts long shadow on Uber’s IPO

Lyft’s IPO priced at the top end of its upwardly revised range last month, assigning it a valuation of more than $24 billion in an offering that raised $2.34 …

By Joshua Franklin and David Randall

(Reuters) – Uber Technologies Inc may face a cooler reception from investors than expected when it prices its initial public offering next month since smaller U.S. ride-hailing rival Lyft Inc’s aggressive stock launch and subsequent fall.

Lyft’s IPO priced at the top end of its upwardly revised range last month, assigning it a valuation of more than $24 billion in an offering that raised $2.34 billion. But the stock has languished since debuting on the Nasdaq on March 29, as concerns about the startup’s potential for profitability have become more prominent.

Lyft shares ended on Wednesday down 11 percent at $60.12, well below their $72 IPO price. Lyft was the first in a string of technology IPOs expected this year, including food delivery service Postmates and smart exercise bike Peleton.

Lyft’s poor stock performance bodes ill for these IPOs, especially for companies like Uber with no profits to show.

“There’s no discernable way these companies are valued. What you’re really buying into is the long-term ability of the company to capture lots of sales and hopefully get profitable at some point,” said Brian Hamilton, founder of data firm Sageworks.

“I’m sure that the Lyft debut is going to affect both Uber and Pinterest,” Hamilton added.

Uber filed for its IPO in December with the U.S. Securities and Exchange Commission during the same week as Lyft. But it let Lyft go first with its offering, partly because it was working on a new private fundraising round for its autonomous driving unit.

Uber is now paying the price of going second. It is planning to seek a valuation between $90 billion and $100 billion, short of the $120 billion investment bankers previously told the company it could be worth in an IPO, Reuters reported on Tuesday.

Image sharing app Pinterest Inc this week also set the terms for its IPO which would value the company at up to $11.3 billion, below its latest fundraising round which valued it at $12 billion in 2017. Prior to Lyft going public, Pinterest had been weighing a valuation at or near the last fundraising round, according to a source familiar with the matter. Pinterest declined to comment.

Uber is expected to make its detailed financial results public on Thursday. It lost $3.3 billion last year, excluding one-off gains, while Lyft lost $911 million for 2018. Pinterest also lost $62.97 million in 2018.

Uber declined to comment.

GETTING GREEDY

Investors and analysts said technology unicorn IPOs are losing their luster, not just because more investors are asking tough questions about their prospects, but because the startups overestimated pent-up demand for their offerings.

“Lyft wanted to be first… and it got to a point where they got so aggressive with their pricing and they got kind of greedy,” said Catherine McCarthy, an Allianz Global Investors research analyst.

The pressure to become profitable will ratchet up once these companies become public, said Jordan Stuart, a portfolio manager for Federated Kaufmann funds who often purchases companies’ stock in the IPO.

“The pace of change is happening so quickly that you have to show that you can become profitable quickly,” Stuart said.

“Some of these companies could go away tomorrow because it’s just an app on my phone and I can find another one in a second to get to work or have food delivered.”

(Reporting by Joshua Franklin and David Randall in New York; Additional reporting by Jennifer Ablan in New York; Editing by Cynthia Osterman)

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Factbox: Four measures to watch for in Uber’s IPO filing

(Reuters) – Uber Technologies Inc’s initial public offering (IPO) filing on Thursday will draw inevitable comparisons to its smaller ride-hailing rival Lyft …

(Reuters) – Uber Technologies Inc’s initial public offering (IPO) filing on Thursday will draw inevitable comparisons to its smaller ride-hailing rival Lyft Inc, which completed its initial public listing last month.

FILE PHOTO: Uber’s logo is displayed on a mobile phone in London, Britain, September 14, 2018. REUTERS/Hannah Mckay/File Photo

Following Lyft’s poor stock market performance of late, investors will be scrutinizing Uber’s financial results and projections closely.

Not only is Uber much larger than Lyft, but it is also more complex, with operations that go beyond its core ride-hailing business and extend into areas such as food delivery and freight transit.

The following are four key financial metrics which investors will be watching for:

REVENUE

Uber is a much larger company than Lyft, with operations in markets ranging from the United States to Latin America to North Africa. Lyft operates entirely in North America.

Uber also has a broader array of business lines, including a food delivery service and a platform for commercial freight.

As a result, Uber clocks much higher revenues than Lyft. Uber reported net revenues of $11.4 billion in 2018. That is in comparison to $2.2 billion for Lyft during the same year.

If one considers revenue growth, however, Uber may take a back seat to Lyft. Lyft has been rapidly gaining market share relative to its larger rival, meaning that its revenue growth has been outpacing Uber’s.

Lyft’s revenue more than doubled between 2017 and 2018, from just over $1 billion to more than $2.1 billion. Uber’s, meanwhile, grew 43 percent, to $11.4 billion.

ADJUSTED EBITDA

This common measure of profitability will look similar to Lyft’s in one major respect: both Uber and Lyft are loss-making companies.

Uber reported an adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) loss of $1.8 billion in 2018, compared to around $950 million for Lyft.

But expect Uber to argue to investors that its scale will give it a significant advantage in terms of profitability over the long run, allowing it to more effectively hold down costs.

It will also likely point out that its year-over-year losses are down, from $2.2 billion in 2017. Lyft’s ticked up over the same timeframe.

CONTRIBUTION MARGIN

This lesser-known financial metric will likely play a big role in Uber’s pitch to investors. It is designed to show whether Uber’s operations in individual markets are profitable on a standalone basis by ignoring company-wide costs like marketing or technology investment.

Expect Uber to make a case that positive contribution margins in many of its markets mean that, fundamentally, its business model works.

Uber has a different method of calculating contribution margin than Lyft, so the two companies’ figures cannot be directly compared, a person familiar with the matter said.

MONTHLY ACTIVE USERS

Uber generates more rides than Lyft in large part due to its wider, global presence. Lyft had 18.6 million monthly active riders as of the fourth quarter of 2018.

Reporting by Carl O’Donnell in New York, editing by G Crosse

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Uber Is Reportedly Aiming For An IPO Valuation Of Up To $100 Billion

In order to cut costs, Uber has been exiting areas where it was losing money under the leadership of CEO Dara Khosrowshahi. For example, Uber …

According to The New York Times’ sources, Uber is reportedly gunning for an IPO valuation of up to $100 billion. However, this figure is below a $120 billion valuation that was floated by investment bankers. This would still make Uber’s IPO one of the biggest in recent years. Shares in Uber are expected to start trading next month.

As a result of this report, Lyft’s shares dropped about 11% on Wednesday as analysts started questioning the company’s valuation ahead of Uber’s public debut. Ever since Lyft went public, the shares dropped more than 15% from the offering price. Uber is expected to formally file to go public later on Thursday.

The reason why Uber is seeking the lower valuation is reportedly due to Lyft’s poor performance. “It’s the Lyft effect,” said Renaissance Capital principal Kathleen Smith via The New York Times. “This is what Uber should try very hard to avoid — it should not have a stock that breaks its I.P.O. price.”

When Uber’s public offering prospectus is published, it will give analysts the opportunity to review the company’s financials and strategy. However, it will not contain any details about the offering’s potential price. And then Uber is planning to begin its investor roadshow during the week of April 29th in preparation for the IPO in May. Uber is reportedly going to trade on the New York Stock Exchange.

The stock may begin trading at between $48-$55 per share. Based on those figures, it would account for the $90-$100 billion valuation and the $10 billion that the company is expected to raise from the IPO. Morgan Stanley and Goldman Sachs are reportedly Uber’s leading underwriters.

The $90-$100 billion valuation is still much higher than the $76 billion valuation that Uber had in its last round of funding in August. As a comparison, Facebook’s IPO led to a $104 billion valuation in 2012 and Alibaba had the largest initial offering at $168 billion.

Uber is still far from profitable as a company. In February, Uber reported that it lost $842 million in Q4 2018 on revenue of $3 billion. In order to cut costs, Uber has been exiting areas where it was losing money under the leadership of CEO Dara Khosrowshahi. For example, Uber sold its Southeast Asia business to a rival called Grab. Uber now reportedly has a 27.5% stake in Grab.

The idea for Uber reportedly came together back in 2008 while friends Travis Kalanick and Garrett Camp were attending the LeWeb annual tech conference, according to Investopedia. One year prior to the conference, Kalanick sold Red Swoosh to Akamai Technologies for $19 million and Camp sold StumbleUpon to eBay for $75 million. During the conference, the two of them struggled to get a cab so they came up with an idea of the ability to summon a limo through an app.

After returning home, Camp bought the domain name UberCab.com and persuaded Kalanick to help him build the company. In early 2010, the service launched in New York with three cars and then it officially launched in San Francisco several months later.

Ryan Graves was named the CEO of Uber in August 2010 until Kalanick assumed the position in December 2010. Graves took on the role of COO and board member at that time.

Today Uber has 75 million riders and 3 million drivers that use the service across 65 countries. And 15 million trips are completed every day as Uber recently surpassed 10 billion trips worldwide.

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Uber, Lyft drivers explain precautions for passengers

The phone application-enabled ride services, Uber and Lyft allow for quick and easy access to transportation. However, rather than a traditional taxi …

Drivers with ridesharing applications, Uber and Lyft, met with

Sun-Gazette staff recently to highlight safety concerns and solutions.

Shawn Mallard, who has been driving for both services for about 4 years, said there are several regulations in place to ensure the drivers are irreproachable.

“Lyft has a very stringent background check policy,” he said. This includes a nation-wide search into criminal history.

“Your record has to be squeaky clean,” he added.

Drivers are subjected to these checks at least once a year, but sometimes are checked more than this. Those drivers who are found to have an issue are dropped from the service.

Uber has been relaxed on this front, according to Mallard, but they too are starting to be more vigilant with their recruitment.

Despite efforts to make the platform as safe as possible, much of the onerous falls on the driver and rider to ensure safe passage.

First and foremost, itinerants must recognize the company issued trade dress, or sticker placed in the windshield of the Uber or Lyft vehicle, according to Jimmy Moore, a driver for both platforms since around February 2018. The large magnets displaying Lyft and Uber are often used by official drivers, but these can be purchased online and don’t provide any legitimacy.

“They’re drivers out there that do not have the stickers on their cars,” he said. “My personal feeling is someone should not get into a car without those stickers being on.”

Drivers are instructed to place the stickers above the dashboard on the passenger-side of the front windshield and in the rear- windshield, again on the passenger-side.

When a request is made on the app, the nearest driver is notified and the potential passenger receives both the name, a picture, vehicle and license plate number, said Robert Johnson, Uber and Lyft since Nov. 2017.

“No. 1, verify the name of the individual that you’re hopping in the car with,” said Johnson. “No. 2, if you can verify the license plate, it’s kind of hard, but verify the plate number, the car color and the vehicle model before you hop in the car.”

The final thing riders should do, according to Johnson is leave a review on the application — both Uber and Lyft have similar review systems.

Drivers and riders have the ability to rate their experience. Those who give less than four stars, out of five, are never matched with each other again.

“If a driver acts inappropriately — starts asking fishy questions, ask you certain personal things, or even touching, — that rider needs to pick up the phone and call Uber or Lyft whoever is used and report that driver,” he said.

Jeff Smead, a driver for Lyft and Uber since July of 2018, said more drivers are starting to utilize dash and cabin cameras to ensure both the driver and passenger safety. If a rider accuses the driver of inappropriate behavior, the driver will have evidence to support his case.

But in general, if a passenger sees a recording device, they feel reassured of their safety, he said.

Safety for children is also high priority for many drivers. As a matter of liability, drivers cannot provide booster or car seats for children under 8-years-old.

Safety, in the end, is what many Uber and Lyft drivers are after, said Moore, both as professional drivers and as people who live in or around Williamsport.

“We’re out here driving, we’re out here as a part-time gig full-time gig, but we also have a concern for the community that we’re driving in,” he said.



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