Uber Technologies (NYSE:UBER) is seeking investors to inject cash into its Uber Freight unit, according to Bloomberg. Uber Freight, the ride-hailing giant’s freight division, launched in 2017 to connect shipping companies with truck drivers. With its headquarters in Chicago, Uber Freight operates as a broker in that connection.
Uber Freight seeks to raise about $500 million for the unit. An investment would value the division at $4.0 billion, or 7.0% of Uber’s overall valuation of $57 billion.
Alphabet’s Waymo currently competes with Uber in ride-hailing and has also set its sights on the freight market. In the freight market, Waymo operates Waymo Via.
Uber Freight is currently seeking external investors, as Waymo has also opened up to external investment. Waymo, which has begun taking money from external investors and has raised $3.0 billion this year, is accepting external investments as it works toward a possible IPO.
Uber Freight and Jio Platforms fundraising
The identities of investors Uber Freight is in talks with aren’t currently known. However, Uber, as a whole, has attracted investments from SoftBank and private equity companies TPG Capital and General Atlantic.
TPG and General Atlantic have also recently invested in Jio Platforms, a unit of Mukesh Ambani–led Reliance Industries. Jio operates the largest wireless network in India, with nearly 400 million subscribers.
TPG invested $600 million for a 0.93% stake in Jio, and General Atlantic put $873 million into the business for a 1.34% stake. Saudi Arabia’s Public Investment Fund, another large Uber investor, bought a 2.32% stake in Jio for $1.5 billion. Google will invest $4.5 billion in Jio for a 7.7% stake. Facebook kicked off the Jio investment frenzy, putting $5.7 billion into the business in April for a 10% stake. Consequently, India’s Jio Platforms has raised over $20 billion over the past three months. It remains to be seen whether Uber Freight will draw Jio-like investor interest. Uber just appointed its new India and South Asia president.
The freight industry that Uber Freight serves is growing rapidly. The global freight trucking market is set to grow to $6.3 trillion by 2025 from $3.8 billion in 2016.
Side operations still losing money
Uber Freight’s revenue rose 57% year-over-year to $199 million in the first quarter. However, the business is still losing money, and its loss widened to $64 million from $29 million a year ago. The division is one of Uber’s side businesses as it works to diversify its revenue source. Another side business is Uber Eats, an online food ordering and delivery service.
Likewise, Uber Eats is also losing money. It suffered a loss of $313 million in the first quarter, rising from a $309 million loss a year ago. However, revenue in the Eats division jumped 120% year-over-year to $527 million in the first quarter. Demand for food delivery has spiked in the coronavirus pandemic, boosting Uber Eats’ business. The losses in Uber Freight and Uber Eats resulted in a companywide loss of $2.9 billion in the first quarter.