Maria Montero

Uber has already made billions from its outings in …

Uber departures from China, Russia and Southeast Asia were listed as company failures, but the ridesharing giant has already made billions on paper from those moves, according to its IPO statement.

Uber launched its long-awaited S1. Thursday, US time, and journalists and analysts are frantically exploring a trove of unpublished details. A series of sections on Uber’s global divestitures begin to show a clear picture of the strategy Uber employed in exiting China, Russia and Southeast Asia in recent years.

In each case, Uber decided to exit the market, but in doing so acquired a stake in its rival business in exchange for its remaining assets. That not only keeps them engaged, but removes the often substantial cost of competing with a single market player and gives Uber options to re-enter the market or profit from its partner’s success there.

That strategy is already bearing fruit. TToday those holdings are collectively worth $ 12.5 billion on paper, with a minimum of $ 3 billion in earnings thus far.

China: $ 7.95 billion

China was Uber’s first tactical outing and saw the company sell to local giant Didi Chuxing in August 2016.

Uber’s filing shows that the American firm took an 18.8 percent take on Didi. That, according to Uber, has since dropped to around 15.4 percent due to subsequent fundraising from Didi, which publicly announced a $ 5.5 billion raise a year ago; previously, it raised $ 4 billion at the end of 2017.

Didi’s $ 56 billion valuation means it is the third most valuable startup in the world, only by ByteDance, parent of TikTok and Uber, which counts as an investor.

The really interesting part of the presentation is Uber’s estimate for the value of its stake in Didi – that was $ 5.97 billion at the end of 2017, and $ 7.95 billion at the end of last year. That’s a $ 2 billion increase on paper in just one year, though Uber’s filing doesn’t provide value for the initial merger deal. Didi is in the money too, having invested $ 1 billion in Uber in exchange for shares.

One notable piece is that an investigation into whether the deal constitutes a monopoly is still ongoing, roughly two and a half years after the transaction was first announced.

“It is not clear how or when that process will be resolved,” says Uber in its document.

Finally, the original agreement included a clause that prohibited Didi from making “certain investments outside of Asia” for a period of six years. The company broke it (it acquired rival Uber 99 in Brazil and expanded its business to Mexico, among other moves), which caused Uber to recover some shares, although its net profit was only $ 152 million.

Didi has struggled for the past 18 months, so safety concerns arose following the murder of two female passengers last year. Operationally, too, there have been challenges. Didi reportedly lost $ 1.6 billion last year, more than Uber, and reaffirmed the organization by laying off 15 percent of its staff recently. Despite buying from Uber, it faces increased competition after a consortium of automakers signed a $ 1.45 billion joint venture for travel trips, while new government rules have made the travel business , and in particular the recruitment of drivers, is more difficult in China.

However, as China’s dominant firm and with an increasingly global presence, you could imagine that Uber’s involvement is likely to become more lucrative in the future.

Southeast Asia: $ 3.22 billion

Uber’s departure from Southeast Asia in March 2018 never seemed like a copy of its play in China, where about $ 1 billion a year was being burned. Instead, I argued that the deal was actually a win for the American firm because it took a decent cut of Grab as part of the deal and Uber’s filings show that that is already proving to be the case.

Uber noted that the exit deal led to an initial 30 percent stake for $ 2.28 billion, which has since diluted to around 23 percent following the Grab fundraiser, which remains ongoing. with a goal of $ 6.5 billion for its Series H. (That may be why Uber’s share was initially announced as 23 percent instead of 30 percent.)