Saudi Arabia's sovereign wealth fund made its highest-profile deal, investing $3.5 billion in U.S. ride-share company Uber Technologies Inc. as the country seeks to diversify its assets with more overseas acquisitions.
Yasir Al Rumayyan, managing director of the Public Investment Fund, Riyadh, will take a board seat at the San Francisco-based company after the deal, which values Uber at $62.5 billion, the company said in a statement. It's the biggest investment in Uber to date and in line with the company's previous valuation.
Uber's biggest global competitor, Chinese ride-hailing company Didi Chuxing, is working on closing a funding round of more than $3.5 billion, according to comments made Wednesday in California by company President Jean Liu.
The unusual pairing between the Saudi sovereign wealth fund and one of the top Silicon Valley startups fits the needs of both. Uber, in no hurry to hold an initial public offering, gets an unprecedented cash infusion to fund costly global expansion against a slew of well-funded competitors. Saudi Arabia, which has a wealth fund with about $200 billion in assets, moves forward with a strategy of overseas expansion after a more than four-decade focus on domestic investments.
The PIF plans to boost its share of overseas holdings to about half by 2020 from 5% now, with Mr. Al Rumayyan spearheading a drive to recruit international bankers, according to people with knowledge of the matter.
Other Uber investors include mutual fund Fidelity Investments, Chinese search engine company Baidu Inc. and venture capital firms, including Benchmark Capital.
In July, Saudi Arabia's wealth fund took a 38% stake in South Korea's Posco Engineering & Construction Co. for $1.1 billion and also plans to invest in Russia. The fund might eventually control $2 trillion once ownership of oil giant Saudi Aramco has been transferred, said Deputy Crown Prince Mohammed bin Salman.
Uber expanded its previous financing round to include the investment from Saudi Arabia's PIF. The money brings Uber's total balance sheet, including cash and convertible debt, to more than $11 billion, the company said. The cash infusion helps the company push off the need to go public.
Uber is currently operating in nine countries and 15 cities in the Middle East and North Africa. The company said it has committed to investing $250 million in the region. It's continuing to spend much more than that in China and India. Uber is expanding in Saudi Arabia, where the app's popularity among women has created one of its fastest-growing markets.