Ride-hailing company Careem says profitability in sight
Get inside Wall Street with StreetInsider Premium. Claim your 2-week free trial here.
By Tom Arnold
DUBAI (Reuters) - Ride-hailing service Careem is targeting profitability next year or in 2018 and is in talks with potential investors about its latest fundraising plans, co-founder Mudassir Sheikha told Reuters on Tuesday.
The company, which has a larger market share than rival Uber [UBER.UL] in most of the 32 cities in the Middle East, North Africa and Pakistan region in which it operates, aims to expand in new markets including Oman and a number of North African countries, managing director Mudassir Sheikha said.
Launched in Dubai in 2012 by Sheikha and fellow McKinsey & Co alumni Magnus Olsson, Careem has a fleet of 90,000-plus drivers and more than four million users registered through its mobile app but has yet to make a profit.
"This type of business requires a fair amount of investment to break even," Sheikha said. "We are looking at next year or the year after for profitability."
Though dwarfed by Uber, Careem raised $60 million last November through an investment led by private equity company Abraaj Group and expects to surpass that with its next fundraising round, Sheikha said.
"Given the growth of the business and projections for future growth we do not see fundraising as an issue," he added, though he gave no indication on timing for the next fundraising.
The company counts Saudi Arabia's Al Tayyar Travel Group as its largest investor and has also received backing from STC Ventures, an independently managed venture capital fund that has the Saudi Telecom Company as anchor investor.
Cairo, Karachi and Riyadh are among Careem's largest markets, with demand particularly strong among women in the latter because Saudi Arabia bars women from driving.
Careem faces stiff competition, however. Uber, which launched services in Abu Dhabi in 2013, said last year that the Middle East and North Africa contained some of its fastest-growing markets and that it planned to invest $250 million to expand in the region.
Careem and Uber suspended services in Abu Dhabi on Aug. 27 after many of their drivers were stopped by authorities over violations of regulations, sources told Reuters at the time.
Sheikha said Careem's suspension was because the company needed to obtain clarification over the type of license its drivers required to operate on Abu Dhabi's roads. Services resumed after a "handful of days", he said.
(Editing by David Goodman)
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- HNA Group to Acquire 25% Stake in Hilton Worldwide (HLT) from Blackstone (BX)
- UK PM May says Brexit vote will not undermine Northern Ireland peace deal
- LWPartners says Dycom shares can double or triple
Create E-mail Alert Related CategoriesReuters
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!