Uber invests Rs200 crore in Xchange Leasing
Uber’s second round of funding in car-leasing firm Xchange Leasing will help the cab-hailing start-up boost supply of cars, keep drivers on its platform
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Bengaluru: Ride-hailing service Uber Technologies Inc. has significantly stepped up investment in car-leasing company Xchange Leasing India Pvt. Ltd, pumping Rs200 crore into the company between June and September.
In a market where maintaining a steady and exclusive supply of drivers is hard to come by, aggressive expansion of the leasing entity is likely to help Uber not only boost supply of cars but also keep drivers locked into its platform and not lose them to home-grown rival Ola (ANI Technologies Pvt. Ltd).
According to documents filed with the Registrar of Companies, Xchange Leasing received Rs201.71 crore from Uber International Services Holding BV and its subsidiary Mieten BV in two tranches, one in June and another in September.
Uber had earlier invested Rs43 crore in Mumbai-based Xchange Leasing between January and March, Mint reported on 15 June, taking Uber’s total investment in the entity this year to about Rs244 crore.
Uber’s director of financial reporting, Joshua James Waldron, serves on the board of Xchange Leasing India. Besides, Xchange Leasing and Uber India Systems Pvt. Ltd have a common director, Mohammad Akbar Khan.
Uber did not respond to an email seeking comment on the investment.
The San Francisco, US-based start-up claims that the number of completed trips in India has risen from 165,000 a week in January 2015 to 1.6 million in January 2016 and 5.5 million at the end of August.
The flurry of investments in the leasing company comes in less than three months of Uber selling its China business to local rival Didi Chuxing.
The sale freed significant capital that the company would otherwise have invested in China to be redirected to India, which is an important market for Uber, especially since it is possibly the last frontier in Asia with a lucrative market potential.
India, with 277 million Internet users, which barely registered as a blip in the global market for cab aggregators (in terms of rides) in the first quarter of 2014, grew into the third biggest market after China and North America in the first quarter of 2016, according to the Internet Trends-2016 report by Mary Meeker, partner at Silicon Valley venture capital firm Kleiner Perkins Caufield and Byers.
In an interview on 15 September, Uber India head Amit Jain said that the ride-hailing firm has started to divert to India a significant portion of the $1 billion investment it had planned to make in China this year.
“We were spending over a billion dollars in China annually. So, that stops. We can see a portion of that being invested (in India) as we continue to grow the business in India. We had several resources that were dedicated to our China business. Like a 150-person product and engineering team that was based in San Francisco and that was completely dedicated to the China business. So, you will see a portion of that being focused now on the India business,” Jain had said in the interview.
Rival Ola has also launched a cab-leasing programme through its wholly owned subsidiary, Ola Fleet Technologies Pvt. Ltd, in September last year. Ola had then said that it, along with financing partners and car makers, will invest Rs5,000 crore on the cab-leasing programme over the coming year.
Ola is persuading drivers to sign up with a lower upfront payment for cabs, zero commissions and new car models to expand its cab-leasing programme, which has struggled one year into launch, Mint reported on 21 September.