With Uber-Didi deal, SoftBank is the king of Asia’s cabs

Updated - January 17, 2018 at 01:01 PM.

SoftBank Corp's human-like robot named 'Pepper' is displayed at its branch in Tokyo in this June 6, 2014 file photo. Japanese manufacturers, flush with cash but loath to spend it at home since the global financial crisis, are finally shedding their deflationary mindset and splashing out on the new plant and equipment crucial to sustaining a nascent economic recovery. Creating a "virtuous cycle" of expansion that boosts wages and in turn lifts consumer spending is central to Prime Minister Shinzo Abe's strategy to unshackle the Japanese economy after two decades of stagnation. REUTERS/Yuya Shino/Files (JAPAN - Tags: SCIENCE TECHNOLOGY BUSINESS POLITICS)

Japanese investor SoftBank could play a role in the consolidation of the online taxi aggregator space in India, as it is a major investor in Ola and indirectly holds a stake in China-based Didi Chuxing. Didi on Monday acquired global player Uber’s operations in China.

SoftBank owns 20 per cent of Ola and has a large stake in the online retail giant Alibaba, which, in turn, holds a stake in Didi. The Chinese app also holds a minority stake in Bengaluru-based Ola.

More funds

With Ola set to raise at least $1 billion in fresh funds to counter the growing share of Uber, most of the investments could come from either SoftBank or Didi.

Ola urgently needs more cash as can be seen from the huge spend it incurs on its operations.

According to industry sources, Ola’s cash burn on a monthly basis is as high as $40 million while that of Uber is $30 million.

The acquisition of Uber in China comes just days after the government there allowed private cars to be used as taxis.

Bigger share According to industry sources, Ola has a larger market share than Uber. However, Uber has access to more funds and if Ola needs to stay ahead, it will require more funding than it has managed to raise so far.

Uber, which recently raised $3.5 billion, most of which was supposed to go into its Chinese operations, can now direct these funds to its Indian operations.

However, Didi is sitting on fresh funding of $7.5 billion and if it chooses to use the funds to increase its stake in Ola, the Indian taxi hailing aggregator will have access to more money.

Published on August 1, 2016 17:28