Hornbill Unleashed

September 26, 2016

Right time to invest in Uber?

Filed under: Politics — Hornbill Unleashed @ 9:01 PM

In April 2005, Accel Partners paid US$12.7 million (RM52.3 million) for a 15 per cent stake in Facebook. By 2012, the start-up was valued at US$83.5 billion. It was US$367.5 billion as on Sept 23 this year.

In a span of 11 years, the US$12.7 million investment had grown 4,340 times to more than US$55 billion.

In 2011, Uber was valued at U$60 million and speculative investors are pushing it past US$70 billion, which will be 1,166 times more than five years ago.

Malaysia’s Retirement Fund Incorporated (KWAP) recently invested US$30 million in Uber, which is equivalent to 0.04 per cent of US$70 billion.

Even an investment of US$300 million would constitute less than half a per cent of Uber’s valuation today.

After the initial public offering, the market capitalisation of Uber Technologies Inc. may hit US$105 billion or drop to US$35 billion.

As such, KWAP is in for a 50 per cent windfall or loss. It is more likely to be the latter as Uber had not won many friends, especially among the regulators.

The service offered by this transportation network company has been banned in many cities in the United States and other countries around the world.

It had no respect for local authorities and had been ruthless against taxi drivers and their dependents.

It made use of gullible private car drivers who risks having their vehicles impounded by enforcement officers or damaged by irate taxi drivers.

It is bent on capturing market share by offering rates lower than regulated fares. It had never been profitable and least concerned with the US$1.2 billion losses for the first half of this year.

Instead of proposing solutions on how ride-hailing services can operate alongside traditional taxi services harmoniously, it had insisted that governments dump existing regulations instead of amending them.

It must be remembered that the technology use by transportation network companies is not exclusive.

Our homegrown Grab is giving Uber a run of the money in Southeast Asia. Uber has recently exited China by selling its operations to a local rival Didi Chuxing. In India, Uber is playing second fiddle to Ola.

When Uber was valued at US$60 million in 2011 and KWAP had invested US$30 million, it would have gone down in Malaysian history as the greatest investment decision.

But no one can be sure for a late investor. The Employees Provident Fund (KWSP) probably had good reasons to stay out of Uber Technologies Inc.

Y S Chan@The Heat Malaysia Online

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