At least two of Uber’s major investors have agreed to sell part of their private shares to a group led by Japanese Investor SoftBank and investment fund Dragoneer. They have offered a deal to the investors through which they can cash out at a discount, which would help bring stability to the management of this ride hailing company.
This multi-billion dollar boost could be important for Uber and its CEO Dara Khosrowshahi. However, this deal would also reduce the valuation of Uber 20% less than the $68 billion that investors thought it was worth in its most recent funding round last year.
According to SoftBank, Benchmark Capital, Menlo ventures, and other early investors have confirmed their intention to shares in the company. Investors have 20 days to take the offers. SoftBank and Dragoneer Investment Group intend to buy at least 13.4 percent of Uber shares through a combination of new and existing stock. SoftBank plans to acquire about $1 billion of fresh stock at Uber’s current valuation of $68.5 billion, and as part of the remaining deal, it would be purchasing existing shares from investors at a lower price. This tactic would help hold up Uber’s price.
The deal will reduce the influence of ousted CEO Travis Kalanick, and clear the way for Uber to sell stock to the public. Under this deal the initial public offering will take place before the end of 2019. Kalanick has control over three out of eleven seats on the Uber board, this deal will let the majority of board members to vote on any future appointments he makes.
SoftBank’s statement said that any sales by Benchmark or Menlo will be “pursuant to the same terms and conditions as will be offered to all other eligible holders that participate in the tender offer.”
Uber has been in a whirlwind of scandals in the past one year, including a sexual harassment suit, changes in the management, and several lawsuits. This unwanted publicity has played a major role in the company’s lower valuation.