CEO of Middle East ride hailing firm Careem looks forward to full recovery by end of year

CEO of Middle East ride hailing firm Careem looks forward to full recovery by end of year
Careem chief executive Mudassir Sheikha said his company has recovered "quite strongly" from the initial wave of the pandemic. (Screengrab)
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Updated 08 February 2021

CEO of Middle East ride hailing firm Careem looks forward to full recovery by end of year

CEO of Middle East ride hailing firm Careem looks forward to full recovery by end of year
  • Appearing on Frankly Speaking, Mudassir Sheikha highlighted the Saudi market’s importance and strategic value to Careem
  • He expressed pride in the fact that Saudi citizens now comprise 100 percent of the company’s workforce in the Kingdom

DUBAI: Careem, the ride-hailing company that has revolutionized mobility and delivery in the Middle East, is looking forward to a full recovery to pre-pandemic business levels by the end of this year, its founder and chief executive Mudassir Sheikha, told Arab News.

Its taxi, delivery and other mobility services took a big hit at the low point of the pandemic recession last summer, when it was forced to lay off one-third of its workforce.

But Sheika said: “From the depths of that crisis we’ve actually recovered quite strongly. If you look at the mobility of people business, which moves people from point A to point B, it’s grown 10 times from that point.

 

 

“The ‘mobility of things’ business — the delivery business — didn’t get impacted as much to begin with, and that that has grown four times.

“Even our nascent Careem Pay business — the ‘mobility of money’ as we call it — has doubled in size. So, the businesses have recovered strongly from that low point.”




Sheikha said his workforce in the Kingdom is now 100 percent comprised of Saudi nationals. (Handout)

Sheikha was appearing on the latest episode of Frankly Speaking, a recorded show where prominent Middle East policymakers and business leaders are questioned on their views about the most important issues of the day.

He also revealed that the Careem workforce in the Kingdom is now 100 percent comprised of Saudi nationals, talked about the new commission structure he hopes will help rescue the restaurant industry, and described in detail the reasons for the 2019 sale of Careem to Uber, which made him one of the wealthiest people in the region.

He also explained how, from start-up origins as a ride-hailing service in 2012, Careem now aims to become a “Super App” that can handle the full panoply of consumers’ everyday needs, from calling a cab to transferring cash.

On the 2019 deal which saw Careem taken over by the global giant Uber, he said: “We’re much stronger as a result of being part of the Uber family, and we can actually do more with that support. Just keep in mind that we have an investor, a parent company. Now that is actually quite resourceful — not just from a funding standpoint, but more importantly from an understanding and knowledge of many of the things that we're trying to do in this region.”

 

 

The $3.1 billion sale to Uber made big profits for a range of Saudi investors who had backed Sheikha in earlier finding rounds, but some analysts said that Careem would have been more valuable if it had floated shares on the Tadawul stock exchange in Riyadh as the region’s first “unicorn” — a startup company that achieves a valuation of over $1 billion.

“The decision on whether to continue and do an initial public offering (IPO) versus become a part of the Uber family was considered carefully by the Careem board at that time, and it was determined that the Uber acquisition was the right way to go,” Sheikha said.

“The way the deal was constructed, we have the right to remain independent. We get to keep the Careem brand, we get to keep the Careem culture and can run this business in a way that makes sense for the opportunities in this region.”

The essential difference between Careem and Uber — now under CEO Dara Khosrowshahi — lies in Sheikha’s ambitions to widen his horizons beyond “people mobility” to provide a range of consumer services via the Careem “Super App.”

“Careem is a Super App whereas Uber's focus is more on mobility and trying to become the house of all mobility options,” he said.

“When you open the app in Dubai, for example, not only can you order a car or a taxi, but you can also get micro mobility — you can get a bike — you can order food, you can order groceries, you can order pharmacy products, you can even pay bills and and pay your friends and family through the app.”

He believes that Saudi Arabia, despite the economic downturn of the pandemic, is a perfect place for the “Super App” strategy. “I think our opportunities are plenty, and frankly, COVID-19, while it has been a tragedy on many dimensions, for digital adoption it's actually been a big booster to what has happened in Saudi Arabia,” Sheikha said.

“From our perspective to become a Super App in Saudi Arabia means that we can actually start helping people, not just with mobility but pretty much almost everything they need on a daily and weekly basis.”

Careem is undecided whether to join the rush of companies chasing Riyadh as the base their main regional headquarters, but Sheikha said: “It is a very important and strategic market for us and we have a large part of our workforce based in Saudi (Arabia), so whether we are headquartered here (in UAE) or there it is fair to say that we all spend a fair amount of our time in Saudi and make sure that it gets the attention it deserves as one of our largest and most strategic markets.”

When Careem first entered the Saudi market in 2013, it faced a problem attracting citizens to become “captains” — drivers of Carem taxis — but Sheikha said the pressure of economics, as well as essential training, has now meant the driver force in 100 per cent comprised of Saudi citizens.

“We did a lot of work to make sure that this was seen as a respectable profession, calling them captains, making sure their earnings were given in a way that was acceptable. We started educating customers on how to behave with these captains,” he said.

 

 

Careem also made a big move to attract female “capitanas” when Saudi laws were changed to allow women to drive, but this has been a more challenging goal. “It has something that we would love to do a lot more on. We have a small percentage of our fleet who are female captains in Saudi (Arabia), and once in a while you will get a ride with them. But it’s been hard to scale that program,” Sheikha said.

“What we’re seeing a little bit is that there are women who want to drive and be capitanas, but there’s still a need for acceptance, and perception and the way that this is seen. That needs to evolve before it starts becoming more widespread.”

Sheikha’s big recent focus has been on the delivery market in the UAE, where the surge in home deliveries during the pandemic restrictions has put some restaurants at financial risk. “The food-delivery business in this region is not in a healthy place,” he said.

Careem weighed into the controversial subject last week with a plan to charge zero commission on deliveries by its drivers, charging instead a flat-rate subscription for access to the Careem app. The move drew an instant response from the competition, notably Noon, the e-commerce company run by UAE entrepreneur Mohamed Alabbar and backed by Saudi Arabia’s giant Public Investment Fund.

But, far from being a price war in the food-delivery business, Sheikha sees the move as one that will encourage long-term stability for the restaurants and delivery companies. “Let's not think short term, let's think mid to long term about this huge opportunity ahead of us. If we try to maximize the economics today, we will sacrifice the long-term opportunity,” he said.

Careem has no plans to move outside its birthplace, the Middle East, because Sheikha believes there are huge opportunities to expand and deepen its “Super App” operations to more of the 15 countries and 100 cities it serves in the region.

Likewise, plans to make its car fleet “greener” — by introducing more electric vehicles, for example — will be a secondary priority to the challenge of making transport and other services more affordable, at least while the economic effects of the pandemic are still with us.

Will Sheikha, having taken Careem so far in the relatively short time since it began, ever decide to hand the wheel over to Khosrowshahi of Uber?

“We are very early in the Careem journey. Inshallah, when we look at this business eight or 16 years from now, we see the region being radically better as a result of Careem being around. So, there's a lot to be done and we are just getting started,” he said.

Watch full episode below:

 

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Twitter: @frankkanedubai


Saudi Arabia co-chairs meeting on restructuring Chad’s debts

Saudi Arabia co-chairs meeting on restructuring Chad’s debts
Updated 41 min 4 sec ago

Saudi Arabia co-chairs meeting on restructuring Chad’s debts

Saudi Arabia co-chairs meeting on restructuring Chad’s debts
  • Chad is the first country to request the restructuring under the new Common Framework for Debt Treatments beyond the Debt Service Suspension Initiative

RIYADH: Saudi Arabia has co-chaired the fourth creditor committee meeting to help Chad restructure its debts under a new G20 framework.

The African state requested the restructuring in January as it struggled with a high debt burden exacerbated by the coronavirus disease (COVID-19) pandemic.

Chad is the first country to request the restructuring under the new Common Framework for Debt Treatments beyond the Debt Service Suspension Initiative. The framework was agreed in November by the G20 under Saudi Arabia’s presidency and the committee held its first meeting in April this year.

Saudi Arabia co-chaired the June 10 virtual meeting with France. The other committee members also included China and India, while representatives from the International Monetary Fund (IMF) were also present as observers.

“The creditor committee supports Chad’s envisaged IMF upper credit tranche program and its swift adoption by the IMF Executive Board to address Chad’s urgent financing needs. The creditor committee encourages Multilateral Development Banks to maximize their support for Chad to meet its long-term financial needs,” the committee said in a press statement.

The statement added that committee members “are committed” to negotiate with Chad to restructure its debts.

The committee highlighted that it was important that private sector creditors be offered “debt treatments on terms at least as favorable as those being considered by the creditor committee, in line with the comparability of treatment principle.”

The IMF in January completed initial talks with Chad on a new medium-term financing program worth about $560 million. According to the IMF, Chad’s total debt amounted to $2.8 billion, or 25.6 percent of gross domestic product (GDP), at the end of 2019. China is its largest official bilateral creditor, according to a report by Reuters.


Mubadala to invest $100m in a Chinese on-demand trucking startup before IPO

Mubadala to invest $100m in a Chinese on-demand trucking startup before IPO
Updated 16 June 2021

Mubadala to invest $100m in a Chinese on-demand trucking startup before IPO

Mubadala to invest $100m in a Chinese on-demand trucking startup before IPO
  • Mubadala to take part in private placements before IPO
  • Ontario Teachers’ Pension Plan Board also investing $100 million

NEW YORK: UAE sovereign investment vehicle Mubadala plans to invest $100 million in Full Truck Alliance Co., a Chinese trucking startup that styles itself as “Uber for trucks,” Bloomberg reported.
Full Truck Alliance (FTA) said on Tuesday it is aiming for a valuation of over $20 billion in its US initial public offering, marking another high-profile Chinese stock market listing in New York this year.
This coincides with a private placement in which the Ontario Teachers’ Pension Plan Board and Mubadala will each purchase $100 million worth of Class A ordinary shares, Bloomberg said.
FTA, more popularly referred to as Manbang in China, said it is offering 82.5 million American Depositary Shares (ADS) at between $17 and $19 per ADS. Each ADS represents 20 Class A ordinary shares.
At the top end of the price range, FTA could raise as much as $1.57 billion from the IPO,which would make it the largest US listing for a Chinese company this year, according to data provider Refinitiv. Chinese vaping firm RLX Technology Inc. raised $1.4 billion in its US IPO in January.
Those figures are expected to be dwarfed in the coming weeks when China’s largest ride-hailing company Didi Chuxing launches its IPO, which is expected to be the biggest share sale of the year. Reuters has previously reported that Didi could raise as much as $10 billion from its stock market flotation.
A spate of richly valued Chinese tech startups have targeted IPOs in the US in recent years, as they can tap into the deepest capital pool in the world and avoid tighter regulatory scrutiny in major Asian exchanges like Hong Kong.
Last year, Chinese companies raised $12 billion from US listings, nearly triple the amount raised in 2019, according to Refinitiv data. This year is expected to comfortably surpass last year’s tally.
Chinese companies have so far raised $5.82 billion in the United States this year, according to Refinitiv data.
FTA, formed out of a merger in 2017 between two digital freight platforms, Yunmanman and Huochebang, is led by former Alibaba executive Peter Hui Zhang.
The company runs a mobile app that connects truck drivers to people that need to ship items within China. It was the world’s largest digital-freight platform by gross transaction value last year, according to research from China Insights Consultancy that was commissioned by the company.
In November, FTA was valued at nearly $12 billion after a $1.7 billion investment, Reuters reported. That investment round was led by Japanese conglomerate SoftBank’s Vision Fund, Sequoia Capital, Permira Capital and Fidelity.
China’s tech giant Tencent Holdings Ltd. is also one of the company’s backers.
Morgan Stanley, CICC and Goldman Sachs are among the underwriters for FTA’s offering in New York. The company plans to list on the New York Stock Exchange under the symbol “YMM.”


Saudi Arabia dominates slow MENA IPO market in Q1

Saudi Arabia dominates slow MENA IPO market in Q1
Updated 16 June 2021

Saudi Arabia dominates slow MENA IPO market in Q1

Saudi Arabia dominates slow MENA IPO market in Q1
  • MENA IPOs lagged the global market in Q1, which was the best first quarter in terms of both deal numbers and proceeds for the 20 years

DUBAI: Saudi Arabian companies accounted for two of the three initial public offerings in the Middle East and North Africa region during the first quarter of 2021, representing 96 percent of the amount raised, according to consultancy EY.
The two listings on the Tadawul in Q1 raised $281.6 million. That compares with $1.45 billion from four listings for the whole of 2020, which represented a 78 percent share of the MENA IPO market, EY said in a report.
Alkhorayef Water & Power Technologies raised $144 million after its retail offering was oversubscribed by 1,511 percent and the institutional offering by 6,320 percent. Theeb Rent a Car Company collected $138 million from its IPO, which was oversubscribed by 6,010 percent for the institutional tranche and 3,385 percent for the retail offering.
MENA IPOs lagged the global market in Q1, which was the best first quarter in terms of both deal numbers and proceeds for the 20 years, generating $105.6 billion from 430 offerings, EY said. MENA IPOs raised $294.8 million, a 64 percent decline from the same period in 2020 and down from $925 million Q4, 2020.
“The MENA region’s IPO market was off to a slower than expected start in 2021, despite expectations for an increase in IPO activity after an uptick and stronger performance in Q4 of 2020,” said Matthew Benson, EY MENA strategy and transactions leader. “We expect IPO activity to bounce back over the coming months while economic conditions in the region continue to improve, aided by the accelerated vaccine rollouts and the possibility of reaching herd immunity against COVID-19.”


Aramco’s entrepreneurship arm launches $27m roadshow to find KSA’s next big startups

Aramco’s entrepreneurship arm launches $27m roadshow to find KSA’s next big startups
Updated 16 June 2021

Aramco’s entrepreneurship arm launches $27m roadshow to find KSA’s next big startups

Aramco’s entrepreneurship arm launches $27m roadshow to find KSA’s next big startups
  • Wa’ed has up to SR100 million ($27 million) at its disposal to hand out in loans and venture capital investments to commercially feasible ventures

DHAHRAN: Saudi Aramco’s entrepreneurship arm Wa’ed on Wednesday launched its first roadshow event to unearth and fund the next generation of Saudi entrepreneurs.

Wa’ed has up to SR100 million ($27 million) at its disposal to hand out in loans and venture capital investments to commercially feasible ventures that would fill existing gaps in the Kingdom’s economy.

Aiming to support game-changing ideas that will create new jobs, the Wa’ed entrepreneurship roadshow will hold a series of events in six Saudi cities from September to December.

Jubail, Yanbu, Riyadh, Jeddah, Makkah, and Madinah will play host to the tour being organized in association with some of Wa’ed’s key partners, including the Royal Commission for Jubail and Yanbu, Monsha’at, the Saudi General Authority for Small and Medium Enterprises, development firm Namaa Almunawara, and investment company Wadi Makkah.

“These shows are a coordinated effort with our partners to find and fund new entrepreneurs who will add value to the Saudi entrepreneurial ecosystem and accelerate the pace of economic diversification in the Kingdom,” said Wassim Basrawi, Wa’ed managing director.

Wa’ed’s aim is to seek bold ideas with potential to positively contribute to the development and diversification of the Saudi economy.

“Seventy out of over 100 startups we supported were the first of their kind and received their first-ever investment from us, and this is what we are targeting now; distinguished and not yet supported startups and ideas,” Basrawi added.

Online applications for all Saudi-based entrepreneurs were due to open on Wednesday. After two selection rounds, successful applicants will be invited to participate in the roadshows in their cities, where events will include startup pitch competitions in the style of TV’s “Shark Tank,” and industry discussions and debate.

The tour will focus on sectors such as financial, agricultural, and environmental technology, industrial applications, reverse engineering, drones, petrochemicals, supply chain, and tourism.

In addition to Wa’ed’s incubation and mentoring services, participants will either earn fast-track funding, including loans for up to SR5 million or venture capital investments with up to SR19 million, and non-refundable grants of SR25,000, SR50,000, and SR75,000.

Amin Nasser, chief executive officer of Aramco, said: “Wa’ed has come a long way since 2011 to support talented Saudis to help them turn their business ideas into real drivers for growth and innovation.

“But the next 10 years will be even more crucial for our entrepreneurial ecosystem as the pace of transformation in-Kingdom accelerates with opportunities emerging in new business growth sectors such as technology, e-commerce, and renewable energy.

“That’s why the roadshows by Wa’ed in six cities across the Kingdom are important to make the most of these opportunities to nurture and enable a more vibrant entrepreneurial culture in Saudi Arabia.”

All those taking part in the roadshow will be able to join and benefit from Wa’ed’s Innovation Ecosystem Society which has more than 1,500 local and international members and around 400 mentors.

Enrichment events and meetings with inspirational speakers, as well as interview-based podcasts, workshops, and webinars will start ahead of the competition and will continue until the end of the program in order to provide value to as many potential beneficiaries from the initiative as possible.

Through the scheme, Wa’ed intends to expand its portfolio more evenly throughout the country. Currently, around 60 percent of its investments are in the Eastern Province, with the remainder distributed around the Kingdom.

Wa’ed has also set a goal to double its annual loan and venture capital deal volume by 2023 in a bid to support the Kingdom’s entrepreneurial ecosystem and keep up with the pace of transformation and emerging opportunities in crucial sectors including technology, e-commerce, and renewable energy.

Wa’ed currently supports more than 100 entrepreneurial businesses in Saudi Arabia by providing the necessary financial support, guidance, and tools for entrepreneurs with creative ideas and startups.

Saudi Aramco’s entrepreneurship center was established in 2011 with a mission to nurture Saudi entrepreneurs and their businesses to strive and help develop the Saudi economy. Since its inception, Wa’ed has invested more than $100 million.

It is the only no-collateral lender and largest institutional venture capital investor in Saudi-based startups.


Indonesia lists three Islamic bonds worth $3bn on Nasdaq Dubai

Indonesia lists three Islamic bonds worth $3bn on Nasdaq Dubai
Updated 16 June 2021

Indonesia lists three Islamic bonds worth $3bn on Nasdaq Dubai

Indonesia lists three Islamic bonds worth $3bn on Nasdaq Dubai
  • The new listings bring Indonesia’s total value of listed sukuk to $19.75 billion

DUBAI: Three sukuk tranches, amounting to $3 billion, have been listed on Nasdaq Dubai by the Indonesian government.
The new listings bring Indonesia’s total value of listed sukuk to $19.75 billion, the Dubai Media Office reported.
“This mounting presence of international issuers clearly underscores Dubai’s active role in promoting Islamic economy, shariah-compliant financial markets as well as supporting sustainable economic development across the world,” Hamed Ali, CEO of Nasdaq Dubai, said.
The three sukuk tranches include one of $1.25 billion yielding 1.5 percent on a five-year maturity; a $1 billion bond with a coupon of 2.55 percent yield and 10 years maturity; and a $750 million green sukuk yielding 3.55 percent yield over 30 years.
Many central banks and sovereign wealth funds in Southeast Asia and the Middle East have expressed strong interest in the paper, with a combined order book exceeding $10.3 billion.