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Home » Daily Briefing » Daily briefing - 27 March 2019

Daily briefing - 27 March 2019

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Uber is to acquire Middle East taxi service Careem

Occasionally, we remind our readers (and ourselves) not to believe all the breathless hype that accompanies almost every press announcement about banking and payments. Take Mastercard, which clearly wants to do the right thing but goes about it in weird ways, announcing today that it is "vowing" to give consumers control of their digital identity. Hot on the heels of Apple's breathless announcement on Monday of a privacy-based credit card, with the added promise that Goldman Sachs won't sell on the data, Mastercard today announces that it is going to offer its customers "a fundamental individual right: 'I own my identity and control my identity data'." Well, thanks a bunch Mastercard, but you're not yet in charge of human identity. Few further details are forthcoming. Self-sovereign identity is one of the more radical and promising ideas around though it involves a fundamental shift in thinking about data capture, far more than Apple, Goldman Sachs or Mastercard are willing to go. So for now: don't believe the hype.

There's a flurry of investment stories coming out of Dubai, where the economy is in dire straits but no one is allowed to talk about it. Payments processor Network International is hoping to surf past the hard times as it eyes the transformation of the Middle East and Africa through digital payments. Network plans an IPO next month in London. Like many processors, Network has attracted investment from private equity groups such as Warburg Pincus and General Atlantic who see major upside in digital payments. Mastercard has announced a $300 million pre-IPO "cornerstone investment", which suggests softness in the market ahead of the planned IPO.

Big news in the mobile wallet world, as Uber acquires Careem. Dubai-based Careem is the Middle Eastern equivalent of Uber, a loss-making business model that succeeds largely because the state-owned taxi service in the UAE offers little competition: passengers are advised to keep Google Maps handy. Having given up its global ambitions, Uber now suggests only regional ambition, and is aiming to take control of Careem while keeping the local brand. "Two people familiar with the transaction said the US ride-hailing company would acquire Careem for about $3.1bn, via a mixture of cash and convertible notes. Careem, founded in 2012 by two former McKinsey consultants, was valued at around $2bn during a fundraising round last year," writes the FT. "The transaction should prove to be a historic moment for technology firms and the venture capital industry in the Middle East, which has struggled to produce few high-profile success stories." Let's see how this plays out. Recall that Softbank and the Saudi Public Investment Fund were major investors in Uber, along witih Al Tayyer, the Saudi travel group. "Saudi-based travel group Al Tayyar has won big with Uber-Careem deal, earning a gross profit of $474 million (SAR 1.78 billion) on their Careem investment, the company disclosed in a filing with Capital Market Authority of Saudi Arabia this morning," reports Menabytes. "Al Tayyar, as we had pointed out in one of our pieces earlier, was one of the first corporate investors in the company, leading Careem's Series B round of $10 million by investing close to $5 million in the round. Al Tayyar continued making investments in the company in following rounds to remain one of the largest shareholders in the company."

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