Qatar’s sovereign wealth fund is investing millions of dollars into mobile taxi dispatching firm Uber as the high-tech startup looks to expand its presence in the Middle East, according to a media report.
The Wall Street Journal said the Qatar Investment Authority (QIA) participated in a US$1.2 billion financing round alongside hedge funds Valiant Capital Partners and Lone Pine Capital.
Neither Uber or QIA has commented on the report.
San Francisco-based Uber has been operating in Qatar for approximately a year as part of its global expansion and allows customers to book a taxi using their smartphone. The company does not employ drivers and instead considers itself to be a technology firm specializing in connecting drivers with passengers and processing payments.
Backing a relatively new technology venture – Uber was founded in 2009 – appears as somewhat of a departure from QIA’s traditional investing strategy, which has in recent years focused on hospitality, retail, commodities, financial services and real estate.
Some of its holdings include high-end luxury brands such as automaker Porsche, financial firms Barclays and Credit Suisse as well as British shopping icon Harrods.
Reports say that Uber may have been looking for more than just money in its recent financing rounds and was seeking a sovereign wealth fund as a strategic partner that could facilitate its expansion into new regions by reducing regulatory hurdles.
The company has faced legal challenges in some jurisdictions. Late last month, the City of Toronto requested a court injunction to bar Uber from operating in Canada’s largest city because it didn’t comply with local regulations governing taxi operators.
So far, that hasn’t been the case in Qatar. Locally, Uber is competing against state-owned Mowasalat – which operates Karwa taxis and licenses the Al Million, Al Ijarah, Capital Taxi and Cars Taxi franchise – as well as fellow mobile limo booking service Careem.
The report of QIA’s investment in Uber comes amid senior leadership changes at QIA, which invests a portion of Qatar’s oil and gas revenues as a way of minimizing the risk posed by fluctuating energy prices to the country’s finances.
Late last week, state news agency QNA announced that Sheikh Abdullah bin Mohammed bin Saud Al Thani had been appointed as QIA’s new chief executive.
The chairman of state-owned telecom firm Ooredoo since 2000, Al Thani also served as chief of the Emiri Diwan from 2000 to 2005 and is a past member of Qatar’s planning council, according to his Ooredoo biography.
He replaces Ahmed Al Sayed, who was appointed as QIA’s chief executive in mid-2013 after serving as CEO of Qatar Holdings, QIA’s direct investment arm.
The Financial Times reported that the move is part of efforts by Qatar’s Emir, Sheikh Tamim bin Hamad Al Thani, to insert his own team into senior government positions, and that Sayed was seen as being too close to former prime minister Hamad bin Jassim, who resigned when the last emir abdicated.
“This is about a spring clean against the old guard,” the Financial Times quoted a Qatari businessman as saying.
Reuters reported that Al Sayed will retain his minister of state title and become an advisor to Sheikh Tamim.
QNA also said that the Emir has reshuffled QIA’s board of directors. The moves include Sheikh Abdullah bin Hamad Al Thani replacing the Emir as chairperson. Sheikh Abdullah is the half-brother of Sheikh Tamim and was named deputy-Emir last month.
The board also includes Sheikh Ahmed bin Jassim bin Mohamed Al Thani as vice-chairperson as well as Ali Sharif Al Emadi, Sheikh Abdullah bin Saud Al Thani and Dr. Hussein Ali Al Abdullah.