Uber-owned ride-hailing startup Careem launches spinout with $400M investment from UAE tech holding company e&

Uber-owned ride-hailing startup Careem announced a spinout with a $400 million investment from UAE tech holding company e&, formerly Etisalat. In a statement on Monday, e& said it has signed a binding agreement with Uber Technologies to acquire a 50.03% majority stake in the spinout — which will be called Careem Technologies — with a $400 million investment.

According to the filing, the company said the Super App will be managed by Careem founders Mudassir Sheikha and Magnus Olsson. Careem’s ride-hailing business, which acquired it for $3.1 billion in 2019, still remains fully owned by Uber.

With the investment, Careem Technologies will focus on expanding the company’s “super app,” which provides dozens of services beyond ride-hailing in one app. Some of the services include Careem Quik grocery delivery in 15 minutes or less, food delivery, PCR test booking, digital payments and remittances transfers, bicycle rentals, laundry, and cleaning services, and event ticket booking.

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

In a statement, a Careem spokesperson told CNBC: “The non-ride services that are Careem-owned and operated today will be owned and operated by Careem Technologies in the future.”  In addition, the spokesperson said third-party partners, such as Washmen for laundry service or Tikety for events marketplace, will continue to operate the services they offer.

Explaining the reason for the creation of an independent entity, the spokesperson said: “It wasn’t necessarily that we felt a spinout was required in any way, and I think Uber’s continued ownership stake in the spinout is a testament to their continued belief in the Super App vision and desire to be part of this journey,” he said. “But ultimately, I think, with Uber being a publicly listed company, there are only so many ways you can take new investment from a new party.”

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

Uber acquired the ride-hailing startup Careem in March 2019 for $3.1 billion. The acquisition was completed in January 202o after completing various regulatory requirements. As part of the acquisition, Careem Networks FZ-LLC became a wholly-owned subsidiary of Uber, preserving its brand. In addition, Careem co-founder and CEO Mudassir Sheikha continued to lead the Careem business, which will report to a board made up of three representatives from Uber and two representatives from Careem. Careem and Uber will operate their respective regional services and independent brands.

Founded in 2012, Careem claims to have 30 million registered users in over 120 cities in the Middle East, North Africa, Turkey, and Pakistan. The company, which counts German car maker Daimler and China’s largest ride-hailing company DiDi Chuxing among its backers, is Uber’s largest rival in the region.