Uber-owned Careem launches spin-off with $400m funding from UAE-based e&

Careem’s super app

Courtesy of Careem

DUBAI, United Arab Emirates — Uber-owned ride-hailing service Careem announced a spin-off Monday, with strong support from a new source as well as its parent company.

Abu Dhabi-based tech holding company e&, formerly Etisalat, signed a binding agreement with Uber Technologies to acquire a controlling 50.03% stake in the spin-off – which will be known as Careem Technologies – at an investment of US$400 million Dollar.

Careem’s ride-hailing business remains wholly owned by Uber, which it acquired for $3.1 billion in 2019. Uber’s involvement in the spin-off is currently unknown.

Careem Technologies will focus on growing the company’s “super app,” which offers dozens of services beyond ride hailing in one app. Some of these services include Careem Quik grocery delivery in 15 minutes or less, grocery delivery, PCR test booking, digital payments and transfers, bike rentals, laundry and dry cleaning services, and event ticket booking.

“The non-ride services owned and operated by Careem today will be owned and operated by Careem Technologies in the future,” a Careem spokesperson told CNBC. Services offered by third parties, such as the Washmen laundry service or the events marketplace Tikety, will continue to be operated by those third parties.

Careem has emphasized Uber’s permanent role in the new entity. “Uber will continue to be involved in the spin-off, but the spin-off will be independent with a different ownership structure,” the spokesman said.

When asked why the formation of an independent entity was necessary, the spokesperson explained that as a public company, Uber has limitations on how new investments can be made.

“It wasn’t necessarily that we felt in any way that a fork was necessary, and I think Uber’s continued involvement in the fork is a testament to their continued belief in the super app vision and their desire to To be part of this journey,” he said. “But ultimately, I think because Uber is a public company, there’s limited ability to attract new investment from a new party.”

With an investment of almost half a billion dollars and e&’s majority stake in Careem Technologies and ongoing support from Uber, Careem is confident in the future growth of its super app goals.

“I’m thrilled to partner with Careem and welcome e& as we expand the Careem super app to deliver more services to millions of people in this fast-paced part of the world,” said Dara Khosrowshahi, Uber CEO, in a Explanation.

Careem operates in over 80 cities and 10 countries, according to its website. Founded in Dubai in 2012 by co-founders Mudassir Sheikha and Magnus Olsson, the company has grown from a Dubai-based ridesharing company to a “Super App” platform used across the Middle East from Morocco to Pakistan.

The Careem Ride-hailing app on a phone outside the Mall of the Emirates in Dubai, United Arab Emirates.

Christopher Pikes | Bloomberg | Getty Images

For e&, the investment is part of a broader strategy to expand from a former telecoms company into a larger global technology and investment group. Hatem Dowidar, CEO of e&, told CNBC in March 2022 that telecom companies, including e&’s predecessor Etisalat, “need to exit the traditional telecom model and move up the value chain”.

“We’ve seen the tech giants grow. We’re now looking at their market caps and the yields they’re offering, and we’re jealous,” Dowidar said at the time.

Holding a majority stake in Careem Technologies seems in line with the company’s goal of expanding and scaling its digital offerings to consumers.

“e& is investing $400 million to become a controlling shareholder of Careem’s Super App alongside Uber and all three Careem co-founders,” e& said in a statement. The investment will significantly accelerate Careem’s goal of “developing the first ‘everything app’ for customers across the Middle East,” the company wrote.

Dubai-based Careem “anticipates significant synergies with e& and expects to benefit from e&’s large customer base” as well as its experience scaling technology companies in a geographic area shared by both companies, it added.

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