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Indian Private Equity Firm Invests in Uber

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August 20, 2015

 

The car-hauling app, Uber, has been looking towards growth opportunities in the emerging markets like India in recent months. The US-based company is likely to increase its focus on India after receiving a strategic investment from the private equity fund, Tata Opportunities Fund (TOF).

 

Size of the Investment Remains Unknown

 

The parties announced the investment on Wednesday, but the size of the investment remains unknown. The parties only described the investment by stating it was “significant”.

 

TOF, which is sponsored by the Indian conglomerate Tata Capital, is around $600 million in size. According to the fund’s records, around $400 million of this has already been committed. The fund has previously invested in companies operating in industries such as engineering, real estate and other such verticals.

 

The fund’s managing partner, Padmanabh Sinha, told Bloomberg the fund’s typical investment is around $100 million.

 

Focusing on the Indian Market

 

Uber has lately been focusing on the Indian market. Uber’s CEO Travis Kalanick told the company is “particularly focused on building a great service for hundreds of millions of Indians” and continued stating, “Tata’s leadership and experience will be crucial in helping us meet this important goal”.

 

The company has previously said it looks to spend up to $1 billion to expand its operations in India. Its aim is to reach 1 million trips per day in the country within the next six to nine months.

 

Uber’s current market share in the country is close to 35%, with nearly 150,000 Uber drivers operating in the country. Bloomberg reported the company’s interest in exploring other partnership, similar to the one made with the private equity fund, in the future. Furthermore, Amit Jain, president of Uber India, told the news agency, “The strategic partnership with Tata fund can take different shapes over time”.

 

Jain also told the Wall Street Journal, the investment by the private equity fund would be used to introduce “many more products that are customized to the India market”. The company is especially focused on establishing a new facility in Hyderabad, which would be its biggest international office.

 

Setting Up New Fundraising Plans

 

Furthermore, TOF has announced its plans to start a new fundraising round next year. The company is expecting to fully commit its $600 million by March next year, after which it hopes to raise around $700 million for further investments.

 

The fund says on its website that it is “sector and stage agnostic and (it) invests in both minority and control deals”. Its previous investments have included other Tata group entities, as well as investments in Indian companies like Varroc Group.

 

Interestingly, the chairman emeritus of the conglomerate, Ratan Tata, has previously made a personal investment in Uber’s competitor, Ola. Ola is trying to battle against Uber and managed to raise $400 million in investments this April.

 

The previous investments have all been within India, with the Uber deal being the first foreign venture by the fund. It remains to be seen whether the fund will continue to look for deals outside of India and whether the private equity fund becomes more involved in the company.

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