Ride-hailing app Careem has closed the first part of a $500 million funding round backed by investors including Japan's Rakuten Inc and Saudi Telecom Co (STC), the Dubai-based company said in a statement on Monday.
Uber's chief competitor in the Middle East and North Africa region said the tranche was worth $350 million and that it was advised by Credit Suisse on the financing.
The cash would be used to help with its expansion plans, the statement added.
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STC said on Sunday it has agreed to buy a 10 per cent stake in Careem for $100 million.
Careem is a competitor of US-based Uber, a smartphone app that connects passengers and drivers. In a notice to the Saudi stock exchange, Saudi Telecom Co said the proposed stake is worth $100 million, to be funded by STC’s “internal financial resources.”
The investment is the latest high-profile Saudi venture since Riyadh in April announced its Vision 2030 plan to diversify the oil-dependent economy and broaden its investment base.
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“This move is in line with the company strategy to invest in the innovative digital world,” STC said, adding it would “enhance communication via mobile within the transport system.” Uber announced in June that Saudi Arabia’s Public Investment Fund would inject $3.5 billion to help the app’s global expansion.
Its rival Careem, was founded in 2012 and has operations in 47 cities across the Middle East, North Africa, Turkey and Pakistan, STC said. STC is the largest Arab telecommunications firm in terms of capitalisation. It has more than 100 million customers in nine countries including Turkey, South Africa, India and Malaysia.
Car booking apps are popular in Saudi Arabia, particularly among women who are banned from driving in the kingdom.