Uber wins $1bn backing from SoftBank and Dragoneer

(PA) Cab-ride firm Uber has clinched a deal with Japan’s SoftBank and San Francisco’s Dragoneer on an investment that could lead the way to its stock-market flotation in 2019.

It is understood that a consortium led by the two firms is set to build an initial stake worth around $1bn (£764m) before buying further stock from existing shareholders and Uber employees that would bring its holding to around 14%.

The move would also pave the way for the company’s much-awaited stock-market flotation by the end of 2019.

Confirmed deal

Uber confirmed in a statement that an agreement had been struck, but did not provide further details.

Deal is a 'strong vote of confidence' says Uber Photo: PA

“We’ve entered into an agreement with a consortium led by SoftBank and Dragoneer on a potential investment,” Uber said.

“We believe this agreement is a strong vote of confidence in Uber’s long-term potential.

“Upon closing, it will help fuel our investments in technology and our continued expansion at home and abroad, while strengthening our corporate governance.”

Lower valuation

Uber is currently valued at around $68.5bn (£52.4bn), but reports suggest that the stock offers would be based on a lower valuation, making the total value of the multibillion-dollar deal unclear.

But Richard Windsor, an analyst at Edison Investment Research, said it would help raise confidence in the ride hailing firm which has suffered a number of blows over the course of the last year.

“The deal also goes hand in hand with agreements to restructure Uber’s corporate governance in a bid to draw a line under the disastrous 2017 that Uber has had,” Windsor said.

‘Badly needed’

“This is badly needed as management turnover, bad press, unhappy drivers and a series of scandals has led to the company focusing on anything but its core business in 2017.

“This has resulted in a meaningful deterioration of its market position and outlook in our opinion.”

It has faced increased competition in the US, where rival Lyft has recently gained backing from Google which is interested in its promoting self-driving technology, and has been squeezed in Russia by local competitor Yandex.

Here in the UK, the ride-hailing firm is battling to keep its service running in London after TfL stripped the firm of its licence in September.

Uber hopeful of London deal

However London mayor Sadiq Khan said on Sunday he supported efforts by Transport for London (TfL) to reach a compromise with Uber after the taxi app confirmed it would appeal in a running row over workers’ rights.

“Uber are challenging Transport for London through the courts as is their right to do so... I support the TfL commissioner meeting with the global CEO of Uber to see if we can reach a compromise,” Khan told the BBC’s Andrew Marr show.

The interview came just three days after new Uber boss Dara Khosrowshahi said he was hopeful of winning back the company’s London operating licence.