Uber-owned Careem launches spinout with $400 million investment from UAE’s e&
Careem’s super app
Courtesy of Careem
DUBAI, United Arab Emirates – Uber-owned ride-hailing service Careem on Monday announced a spinout with major backing from a new source as well as its parent company.
Abu Dhabi-based technology holding company e&, formerly Etisalat, signed a binding agreement with Uber Technologies to acquire a 50.03% majority stake in the spinout – which will be known as Careem Technologies – with an investment of $400 million.
Careem̵[ads1]7;s ride-hailing business remains fully owned by Uber, which bought it for $3.1 billion in 2019. Uber’s stake in the spinout has not yet been disclosed.
Careem Technologies will focus on the growth of 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, food delivery, PCR test ordering, digital payments and money transfers, bicycle rental, laundry and cleaning services and ticketing for events.
“The non-driving services that are 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-party partners, such as laundry services Washmen or event marketplace Tikety, will continue to be operated by these third parties.
Careem has emphasized Uber’s enduring role in the new entity. “Uber will continue to have a stake in the spinout, but the spinout will be independent with a different ownership structure,” the spokesperson said.
When asked why it was necessary to create an independent entity, the spokesperson explained that Uber being a publicly traded company meant there were restrictions on how new investment could come in.
“It wasn’t necessarily that we felt a spinout was necessary in any way, and I think Uber’s continued ownership in the spinout is a testament to their continued belief in the Super App vision and desire to be a part of this journey,” he said. “But at the end of the day, I think, with Uber being a publicly traded company, there’s only so many ways you can take new investment from a new lot.”
With the nearly half a billion dollar investment and majority stake in Careem Technologies from e& as well as ongoing support from Uber, Careem says it is confident in the growth of its superapp goals going forward.
“I’m thrilled to partner with Careem and welcome e& as we grow the Careem super app to deliver more services to millions of people in this fast-moving part of the world,” Uber CEO Dara Khosrowshahi said in a statement.
Careem operates in over 80 cities and 10 countries, according to its website. Established in 2012 in Dubai by co-founders Mudassir Sheikha and Magnus Olsson, the company grew from a Dubai-based ride-sharing company into 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 Pike | Bloomberg | Getty Images
For e&, the investment is part of a wider strategy to expand from what was previously a telecommunications company into a larger global technology and investment group. e& CEO Hatem Dowidar told CNBC in March 2022 that telcos, including e& predecessor Etisalat, “need to move out of the traditional telecom model and move up the value chain.”
“We saw how the tech giants grew. We now look at their market capitalizations and the returns they offer, and we feel jealous,” Dowidar said at the time.
Holding a majority stake in Careem Technologies appears to be in line with the company’s aim to grow and scale its digital consumer offerings.
“e& is investing USD 400 million to become a majority shareholder in Careem’s Super app together with Uber and all three of Careem’s co-founders,” said a statement from e&. The investment will significantly accelerate Careem’s goal of creating “the first ‘everything app’ for customers across the Middle East,” the firm wrote.
Dubai-based Careem “expects significant synergies with e& and expects to benefit from e&’s large customer base” as well as their experience in scaling technology businesses across a geographic area shared by both companies, it added.
