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Ride-hailing app Uber is said to be stepping on the gas pedal for its initial public offering (IPO) plans, as Wall Street’s top banks jostle with each other to get the underwriting spot for the firm’s well watched IPO.
The tech giant is said to be switching to a faster gear with plans to launch its IPO by the first half of next year, sources told media outlets. Banks such as Morgan Stanley and Goldman Sachs are submitting proposals to the company, valuing the business to as much as US$120 billion, according to a report from The Wall Street Journal, citing people who are familiar to the conversation.
Uber’s chief executive Dara Khosrowshahi has in the past spoke publicly on the group’s plans to launch an offering by the second half of next year. The company is said to have an agreement with its investor SoftBank to have an IPO debut by next year.
The largest IPO to-date was Alibaba’s US$25 billion IPO offering in 2014. At its IPO debut, Alibaba was valued at over US$231 billion.
However, valuations for tech companies have been observed to adjust prior to the actual IPO offering. In June this year, Chinese gadgets maker Xiaomi Corp went public in Hong Kong at a US$54 billion valuation, which is half of its earlier target value of US$100 billion. The firm went on to raise US$4.72 billion in the Hong Kong market, selling 2.18 billion shares at HK$17 each.
Uber in August received a US$500 million shot in the arm from Japanese auto firm Toyota, which brought Uber’s valuation to US$72 billion. According to startup analytics portal Crunchbase, the San Francisco-based company which was founded in 2009, currently operates in over 60 countries and employs more than 5,000 staff. It has raised a total of US$22.2 billion in over 20 funding rounds.
The stepping in of a new chief executive Mr Khosrowshahi has seen the firm take steps to boost its accountability to stakeholders: The firm has been placed in the spotlight recently for scandals including the stealing of trade secrets. Last month, Uber settled an investigation into a 2016 data breach by paying US$148 million. Earlier in the year, it reached a settlement with car company Waymo over alleged stolen trade secrets.
Uber counts tech venture capital firm SoftBank as its largest shareholder. Toyota and Amazon’s Jeff Bezos, are also its investors.
Following speculations on Uber’s IPO valuation as well as a buoyant market activity helped by Wall Street gains, SoftBank’s shares climbed 2.13%, closing higher on Wednesday while Toyota’s shares also closed its counter in the green, up 1.38%.
IPO talks also in the works for Lyft
The heat is on amongst the two car-sharing apps to gun for an IPO ahead of each other, as Uber’s rival Lyft is said to have selected JPMorgan Chase, along with Credit Suisse, and Jefferies Financial as its underwriter for its planned IPO which is slated to be by March or April next year.
Lyft is the second-largest ride-hailing firm in the US. As of June, the San Francisco firm is said to be valued at US$15.1 billion.