Dubai-based ride-hailing app Careem sees potential for growth in more than 250 new cities across the Middle East, North Africa, Turkey and Pakistan as it seeks to become profitable by 2020.
Careem, which is Uber's largest rival in the Middle East, is looking to scale its presence in existing markets such as Egypt, Pakistan, and Saudi Arabia by serving second or third-tier cities in those geographies and enter new markets such as Oman, Algeria and Tunisia, chief executive Mudassir Sheikha told The National on Tuesday.
“Our estimate is there’s at least 250 cities in our region that should have a service like Careem, these may not be the tier-one Cairos of the world, but they’re still important,” Mr Sheikha said. “We’re still less than 1 per cent of the penetration of the opportunity at hand.”
Careem, which was founded in 2012, currently serves 24 million customers across 14 countries. It will add the 100th city to its list of operations when it starts service in Khartoum this week. The company mainly operates in the Mena region from the UAE to Morocco using 800,000 drivers. It provides chauffeured rides in countries with insufficient public transport options where large parts of the population cannot or do not drive.
The firm sees potential to add five to 10 more cities in Egypt including Asyut and 25 additional cities in Pakistan, while “Africa is on the horizon” but is still under study, Mr Sheikha said.
Careem will roll out a new food delivery service throughout its markets this year after acquiring online restaurant listing and reservation platform RoundMenu in February, he noted.
Expanding its offering beyond rides to tap into the region’s $15bn food delivery business, creating more affordable rides with tuk-tuks and bikes, as well as allowing regional start-ups to use its payment system and geographic reach will be the focus for growth, he said.
Careem, which was valued at $1bn during its last round of fundraising in 2017, has enough capital on its balance sheet and it does not plan to raise more funds for its expansion, Mr Sheikha said. Careem has already been approached by some of the regional and global investors and the company has "entertained those discussions”.
“We don’t need the money, if there’s some interest that we do believe is strategic for us, it has to be done for strategic reasons," he said.
In an updated statement on Wednesday, Careem clarified its position regarding fund-raising plans.
“We are fortunate to have the support of benchmark regional and global investors and already have significant capital to fund our expansion plans,” the company said. “Given our traction, the attractiveness of the platform we are building, we have received significant interest from investors to consider taking additional capital. We are always open to bringing on strong partners to help us simplify lives in the region and will share more updates on our upcoming fundraising soon.”
In March, Reuters reported that the company was in early talks to raise as much as $500 million in new funds from investors, which could go towards new business lines. In June, Careem closed a $500m round of funding led by Kingdom Holding, the investment vehicle of Saudi billionaire Prince Alwaleed bin Talal, and the world’s biggest luxury car-maker Daimler.
Taking the company public would be a “natural milestone” but there are no immediate plans for an initial public offering and Careem is focused on growth, Mr Sheikha said. It is targeting break-even by 2020 and expects to become profitable from 2020 onwards, though core business in key markets could turn a profit earlier.
In January, Bloomberg reported Careem is in early talks with banks about a potential IPO with a share sale likely by early 2019. The firm could be valued at about $1.5bn.
Careem, which faced a Jordan court order to halt services in Amman until it obtained necessary licenses, has resumed operations in the capital after applying for permits, Mr Sheikha said.
A group of local taxi drivers had filed a lawsuit against Careem, claiming that registered taxis pay fees and taxes while Careem allows drivers to use their personal vehicles, Jordan Times reported last month.