Uber plans to raise millions by encouraging investments from wealthy Chinese

Uber Technologies Inc. is planning to rope in wealthy Chinese investors who are willing to lay out a minimum of 3 million yuan (AU$649,043) each, with the goal to raise a minimum amount of US$100 million (AU$138.8 million) from the affluent Chinese. The plans have been laid out by the company in a document circulated to its investors.

According to the document circulated by the company, as obtained by Bloomberg, the “Project U,” which offers a 109 percent investment returns, plans to put 80 percent of the funds into shares. The rest of the money would be put into the company’s stakes in a separate China arm.

However, no matter how lucrative it might appear, such offers are not free from risks either, especially in a country like China where Uber is lagging far behind the market leader. Didi Kuaidi enjoys the backing of the country’s two biggest Internet companies. Uber is, however, prepared to invest up to 7 billion yuan (AU$1.5 billion) to ensure its presence across 100 Chinese cities by 2016, apart from the 16 that it already in now.

“The short-term competitive environment is going to be tough, which may have an influence on investors,” said Kirk Boodry, a Singapore-based analyst at New Street Research SG Pte. “We don’t know if Uber will succeed in China or not, but it may be that they get a smaller share of the market than they might have originally anticipated.” Boodry also feels that the current scenario in the global market would make it even harder for Uber to raise the money.

To make the company achieve the minimum target mark, the document declares that the investment options provide an opportunity for the investors to plough money into a company having an estimated value of US$50 billion (69.5 billion). Plans for entering 500 cities worldwide is underway for Uber by the end of the year.

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