Online cab aggregating platform Uber Technologies, which raised $3.5 billion on Wednesday from Saudi Arabia’s Public Investment Fund, is likely to invest a substantial portion of this fund in Indian operations.
This is likely to intensify the competition in the growing online taxi market in India where Uber is locked in an intense marketshare battle with the home grown player – Ola.
“This investment is part of global fund and we are incredibly excited to use this capital in our globally strategic markets like India. Having grown exponentially over the last two years, we are bullish on the Indian market and this investment will support the remarkable growth of Uber in India,” an Uber Spokesperson said.
In July last year, Uber had announced an investment of $1 billion in India to expand its services and it also setup a response and support centre in Hyderabad.
It also has an engineering centre in India in Bengaluru, which is the first outside its headquarters – US.
According to reports, Uber India president Amit Jain said, “A substantial portion will be for India. We have grown exponentially…we continue to register remarkable growth.”
Uber entered the Indian market in 2013 and is currently present in 26 cities.
The taxi aggregator which initially started its service accepting only card payment subsequently changed its strategy to accept cash payments to suit Indian conditions.
The company has also recently launched its budget version UberGo in response to Ola’s Mini. Ola, which is backed by Softbank, had raised has raised $500 million in November last year from Baillie Gifford, Falcon Edge Capital, Tiger Global, SoftBank Group among others, has closed over $1.3 billion of external funding over the years.
Backed by marquee global investors, both Ola and Uber have been burning significant cash over the past year with ride-linked incentives to drivers in a bid to capture the market and attract more drivers on to the platform. They are also fighting cases against each other in the Indian court.
According to RedSeer, a consulting firm, between the two aggregators, Ola has got the edge over Uber in terms of market share and more drivers on its platform.
Ola has about 65% of the market share, while Uber has about 35% and the latter is said to be losing the market share ever since Ola launched its Micro service. In May last year, while Ola had about 1.6 lakh cabs attached to its platform.
In a year’s time it has more than doubled the number and has about 3.5 lakh cabs now. However, currently it has about 3.5 lakh cabs present in 102 cities.
The India’s online taxi services market is estimated to grow at a CAGR of over 17% during 2015-2020, according to Research and Markets, a US-based market research firm.
The total taxi market size is estimated to be around $12 billion in India.
Just last month, Toyota has announced its investment in Uber following Apple’s Investment China rival Didi Chuxing Technology Co, which in turn has invested in Ola in India.
Uber, which is backed by Google Ventures, blue-chip Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers, Fidelity Investments, Jeff Bezos of Amazon, Goldman Sachs among others is estimated to be valued over $62.5 billion.