Careem reveals Rakuten as its second major investor

The e-commerce company is the other major investor in the Dubai-based ride hailing company along with Saudi Telecom.

Part of Careem's US$350 million fund-raising drive will go to fund its research and development, one of whose projects is driverless pods, showcased at Gitex 2016. Courtesy Traccs UAE

The Japanese e-commerce giant Rakuten has been confirmed as a second new major strategic investor in Careem, as part of a US$350 million financing package announced yesterday by the ride sharing company.

Rakuten, the world’s largest e-retailer outside China and the US, was confirmed yesterday as the co-leader of a $350m fund-raising drive by Careem, together with Saudi Telecom, alongside a series of smaller investors.

Saudi Telecom said on Sunday that it had reached an agreement to acquire a 10 per cent stake in Careem, which operates in 47 cities in 11 countries, for $100m.

Mudassir Sheikha, Careem’s chief executive, told The National that Rakuten had acquired “a meaningful equity stake” in the company using the same valuation, declining to give further details.

Ratuken did not respond to requests for comment.

The Japanese company already owns a 10 per cent stake in Lyft, the second largest ride-hailing service in the US behind Uber, as well as shareholdings in similar companies including Indonesia’s Go-Jek and Cabify, which operates in Spanish and Portuguese speaking markets in Europe and Latin America.

Oskar Mielczarek de la Miel, Rakuten’s head of ride-sharing and fintech investments, and an as yet unnamed Saudi Telecom executive, will be on the board of the company.

“It’s exciting for us because up until now we’ve had mostly regional investors that have been instrumental in bringing the business this far,” said Mr Sheikha. “As our scale has increased it is very helpful to get a global investor on-board who has built these types of platforms in other parts of the world. There should be a lot of learning and knowledge sharing that’ll be possible.”

The $35m raised by Careem is part of a $500m funding drive, coordinated by Credit Suisse.

Other entities contributing funding include existing shareholders such as Beco Capital, the Abraaj Group and Wamda Capital, as well as newer investors including Egypt’s El Sewedy Investments and US-based SQM Frontier Management.

Mr Sheikha said that the remaining $150m is likely to be secured by the end of the first quarter of next year.

The new funds will be used to invest further in R& D, deepen Careem’s presence in its existing markets, and expand into new countries, he said.

Careem plans to offer services in five new cities within Pakistan in the coming months, together with additional cities in Saudi Arabia and Egypt.

The company said last month that it was examining markets in East Africa as potential new territories.

Mr Sheikha said that some of Careem’s earliest launch markets were approaching break-even point and that the company as a whole was expected to achieve profitability “within one to two years.”