Uber has nailed down a record US$3.5 billion investment from the Saudi Arabian Public Investment Fund -- the largest-ever investment in a closely held technology firm.
The investment is part of a deal that will allow Uber to expand its Middle East operations. Yasir Al Rumayyan, managing director of the fund, will take a seat on Uber's board of directors.
With a valuation of about $62.5 billion, Uber now is considered the most valuable venture capital-backed firm in the world.
The investment brings the company's total balance sheet, including its cash on hand and lines of credit, to more than $11 billion.
"We appreciate the vote of confidence in our business as we continue to expand our global presence," said Uber CEO Travis Kalanick. "Our experience in Saudi Arabia is a great example of how Uber can benefit riders, drivers and cities, and we look forward to partnering to support their economic and social reforms."
The deal is considered historic -- not just because of the Saudis' vote of confidence in Uber, but also due to their willingness to place such a major bet on a young technology firm like Uber.
Saudi Arabia is working from the blueprint of its Vision 2030 plan, which is designed to wean the kingdom from dependence on oil, which has dominated the regional economy for decades, Al Rumayyan said.
"We've seen first-hand how this company has improved urban mobility around the world, and we're looking forward to being part of that progress," he commented.
Under the Vision 2030 plan, the country will unlock strategic sectors from tourism and entertainment, encourage entrepreneurship, boost job opportunities, and increase the number of women in the workforce.
The drop in world oil prices -- due to lower fuel consumption, drilling for new supplies in the U.S., and the rising use of alternative energy and transportation methods around the world -- has put a severe crimp in the revenue streams flowing into Saudi Arabia and other regional oil economies.
"I think it is an indicative investment of where we are moving for the country -- putting our money in a visionary business," said Reema Bandar al-Saud, a Saudi Arabian princess and new member of Uber's policy advisory board. "A lot of people were originally skeptical of Uber in our region, and the fact that PIF is investing is quite an indicator of how things are changing."
Uber currently has invested more than $250 million in the Middle East, operating in nine countries and 15 major cities in the region, including Cairo and Alexandria in Egypt; Beirut; Amman, Jordan; Tel Aviv; Doha, Qatar; and Riyadh, Jeddah, Mecca and Medina in Saudi Arabia.
Uber has more than 395,000 active riders in the region -- a 500 percent increase from the first quarter 2015 to 2016 -- and about 19,000 active drivers.
More than 80 percent of riders in Saudi Arabia are women, due in part to the large number of women who don't drive and don't take public transit, Uber said. Part of the country's plan is to bring 1.3 million women into the Saudi workforce by 2010, which would make them 30 percent of the overall workforce, compared with 14 percent currently.
The announcement comes just weeks after Apple announced a record $1 billion investment in Didi Chuxing, a leading rival to Uber in the Chinese market.
The Saudis may be future-proofing against the shift toward alternative fuels and the rising popularity of ride sharing in the U.S., suggested Rob Enderle, principal analyst at the Enderle Group.
"I suspect it is because some future projections suggest companies like Uber will own the majority of cars once self-driving becomes common," he told the E-Commerce Times. "A large interest in the firm is both a potential hedge against a massive drop in consumption of personally owned cars, and leverage to help make sure Uber doesn't go electric for as long as possible."