SoftBank's Masayoshi Son emerging as primary financier behind anti-Uber alliance

HONG KONG/TOKYO (BLOOMBERG) - Uber's rivals are piling on a company in crisis with SoftBank founder and chief executive officer Masayoshi Son emerging as the primary financier behind the anti-Uber alliance.

On Monday (July 24), Grab, the leading provider of ride-hailing services in South-east Asia, said it raised US$2 billion (S$2.7 billion) from Japan's SoftBank Group and China's Didi Chuxing and expects to receive another US$500 million from new and existing backers.

The money will help Grab, which already dominates the region, defend its turf against Uber in one of Uber Technologies' most important global markets after retreats from China and Russia.

While a series of scandals at Uber culminated in the ouster of chief executive officer Travis Kalanick in June, its competitors in China, India, Brazil and Singapore have raised a total of about US$9 billion to accelerate their expansions.

The money, primarily from SoftBank, jeopardises Uber's push for global dominance and its US$69 billion valuation.

"This funding round is a great threat to Uber," said Zhou Xin, an Internet consultant at Beijing-based Trustdata. "If Uber loses South-east Asia, it will significantly curtail its value proposition as a global operation."

International markets have proven brutal. Uber sold its business in China to Didi after a fierce battle that saw each company burning through more than a billion dollars a year at one point as they fought for drivers and riders with rich subsidies. Uber negotiated a similar move in Russia this month as it seeks to narrow losses.

Now, Uber is trying to compete with its leadership in turmoil. Mr Kalanick stepped aside after a lawsuit by Alphabet Inc's Waymo over trade secrets, a US criminal probe over a software tool for evading regulators and an investigation into alleged sexual harassment and discrimination. Several lieutenants, including ally Emil Michael, have also left.

"Uber is serving millions of riders and and drivers in over 55 cities across South-east Asia, and is expanding rapidly to meet strong demand for ride-sharing and food delivery," the company said in an e-mailed statement.

"With positive regulatory momentum behind the industry in the region, we are continuously investing in the app and talented local teams to ensure the very best experience for everyone, everywhere we operate."

In April, SoftBank led a US$5.5 billion investment in Didi aimed at giving the Chinese ride-hailing start-up a war chest to invest in new technologies and foreign expansion. SoftBank also sprinkled money into Brazil's largest ride-sharing start-up 99 and India's Ola, and is in discussions to back Uber's US competitor Lyft, people familiar have said.

"SoftBank missed the chance to invest in Uber before it became the leading ride-sharing platform in the US," said analyst Masahiko Ishino at Tokai Tokyo Securities. "Other regional ride-sharing companies still need capital to get up to speed."

Grab, led by Mr Anthony Tan, has taken an early lead in South-east Asia. The company said on Monday it has 95 per cent of third-party taxi-hailing in the region, handles 71 per cent of private vehicle hailing and provides almost three million daily rides.

Yet it may be too alluring a prize for Uber to concede. The market of some 620 million people, stretching from Indonesia to Myanmar, is projected to expand five-fold to US$13 billion by 2025.

"Uber is not walking away from South-east Asia," said analyst Atul Goyal at Jefferies Group. "It's a freer market where they actually stand a chance, unlike Russia and China where you have significant language and regulatory barriers."

Uber's rivals in South-east Asia may yet get support from China's tech titans, which are looking for ways to promote their lucrative payments services. Alibaba Group Holding co-founder Jack Ma and its Alipay affiliate have looked at investing in Grab, people familiar with the matter have said.

Separately, Tencent Holdings has considered putting money into Indonesian ride-sharing giant Go-Jek. Though Grab said it is expecting to raise another US$500 million, it is unclear whether any Ma-related entities will be taking part.

SoftBank has toyed with the idea of buying Uber shares from early investors, people familiar with the matter have said. Yet Mr Son has mostly chosen to corner Uber by investing in competitors around the world, a strategy that seems to be paying off.

"One loss in battle can set off a landslide," said Zhou. "Uber needs to prove that it can beat local players at catering to users and that is proving much harder than imagined."