Uber-Careem Deal: An Indication Of Dubai’s Favorable Business Climate
The recent move by Uber to acquire it’s Middle Eastern rival, Careem for $3.1 billion, has been the focus of discussion throughout the UAE. The initial reaction to this decision has been quite positive, with economists anticipating a favorable business climate in Dubai after the close of the transaction in Q1 2020.
Uber will be in control of all of Careem’s mobility, delivery and payments business across the Middle East region after the acquisition. The UAE is recognized as one of the major markets of Careem, and this deal is sure to bring in a lot of changes to the country and especially Dubai.
Here are some of the noticeable changes that are about to take place in the UAE’s tech industry:
Impact of the Uber-Careem Deal
Careem is a star-startup in Middle East’s tech universe similar to Souq.com. Amazon acquired Souq.com in 2017 for $580 million. The higher price tag on Careem shows the influence of internet startups in the Middle East. This is also proof that tech investments in this region can be quite profitable in the future.
Careem is one of the few enterprises that aligns with the vision of Dubai’s rulers to transform each emirate into self-sufficient tech hubs as part of the country’s efforts to diversify its economy.
The Shift In Business Environment
The announcement of Uber-Careem deal means that investors in Dubai can enjoy and reap benefits from the shift in the business environment. The UAE and especially the Emirate of Dubai will find this as a chance to diversify the economy by focusing on working strategies that can upgrade its tech industry. This acquisition will draw a fair share of attention to Dubai and its potential as a business incubation center for startups and small business ventures. This will definitely boost the region’s IT ecosystem and project it to the world as a highly-favorable market.
The $3.1 billion price tag is also significantly higher than Careem’s valuation in its final investor round. This can still go higher once Uber goes public. As it is a deal with the potential to raise it’s share prices above $55, the transaction will definitely benefit the founders, staff, and investors any other stakeholders, rewarding them handsomely.
The Uber- Careem deal will open up avenues for the Venture Capital ecosystem in Dubai. VCs are now presented with evidence that the region can successfully nurture innovative projects from its conception to exit. It presents an opportunity for them to generate profits, which can be reinvested in the region time and again for bigger technology projects.
The Next Step
Technology remains similar everywhere but market nuances can determine how a particular business performs in the market. The Uber-Careem deal has created new hope for investors and entrepreneurs in the region, paving the way for an influx of businesses and investments into Dubai and the country as a whole. Dubai can soon look forward to a tech industry boom in the near future.
For more information on Dubai’s business ecosystem and company formation, contact us at Senat MEA.