Uber takes SoftBank investment and drives changes
Uber is to accept an investment of up to $1.25 billion from Japan’s SoftBank and usher in new governance rules aimed at reining in former CEO and co-founder Travis Kalanick, according to press reports.
Iain Morris at Light Reading (Banking Technology‘s sister company) reports that an injection of funds by the Japanese telco would be followed by a series of board changes at Uber, the ride-hailing app developer is also reported to have said, with those reforms apparently designed to curb Kalanick’s influence.
Kalanick resigned in June following reports that allegations of sexual harassment within Uber had been ignored and amid clashes with regulatory authorities in the US and other parts of the world.
Dara Khosrowshahi, his replacement and the former CEO of travel website Expedia, is trying to patch up the company’s reputation and convince authorities in some markets that Uber should be allowed to operate its Internet-age taxi service, which connects people needing transport with vehicle owners.
Watchdogs in several markets, including the city of London, have expressed concern that Uber has tried to conceal information from regulatory authorities, and that its checks on drivers have not been sufficiently rigorous.
News of the SoftBank funding comes a few weeks after the Japanese company said it was considering an investment in Uber, having already made financial commitments to Uber-like firms in Asia.
Besides operating one of Japan’s biggest telecom networks, SoftBank and CEO Masayoshi Son have made investments in a wide range of technology companies worldwide, including UK chip designer ARM and Chinese ecommerce player Alibaba. SoftBank also controls Sprint, the fourth-biggest mobile operator in the US.
In a statement published on the BBC website, Uber is reported to have said: “The board voted unanimously to move forward with the proposed investment by SoftBank and with governance changes that would strengthen its independence and ensure equality among all shareholders.”
The SoftBank investment is expected to be between $1 billion and $1.25 billion, according to anonymous sources cited in other mainstream news reports.
The Quartz website reports that SoftBank is due to invest $1.25 billion directly in Uber, valuing the business at $69 billion, and that it will also buy 14% to 17% of outstanding shares from existing investors.
It also says that governance changes will expand the size of the board from 11 to 17 seats, giving two of those to SoftBank representatives, and stop board members such as Kalanick from exercising too much control.
SoftBank’s investments in several ride-hailing companies raise the prospect of a merger between those various global assets at some point in the future.