Careem Launches Delivery Service, Expects to Close Funding Round Soon
Careem launched a delivery service covering everything from takeaway food to pharmaceuticals on Monday, diversifying from its core Middle East ride-hailing business and increasing competition with rival Uber Technologies.
The company has expanded its car service business to more than 120 cities in 15 predominantly Middle East countries since launching in 2012.
“We believe the opportunity for deliveries in the region is even bigger than ride-hailing,” Chief Executive and Co-Founder Mudassir Sheikha told Reuters at Careem’s headquarters in Dubai. “It is going to become a very significant part of Careem over time.”
It plans to spend over $150 million developing the delivery business, starting with food delivery services in Dubai and Jeddah.
“Once you see us prove the model in the UAE (United Arab Emirates) and Saudi (Arabia), you will see us very quickly go to new markets,” Sheikha said. “Egypt and Pakistan will come next and then very soon the rest of the footprint will follow.”
Careem, whose investors include German carmaker Daimler and China’s largest ride-hailing company Didi Chuxing, has trialled food delivery since acquiring an online restaurant listing platform in February. It also offers digital payment services.
The Careem NOW delivery service is a separate app to the car service and will be operated independently to the core business with Adeeb Warsi appointed as managing director. Warsi joined Careem in 2017 after more than seven years with the Boston Consulting Group, according to his LinkedIn profile.
In October, Careem said it had raised over $200 million from existing investors to fund its expansion.
Careem will “most likely” close out the funding round in the first quarter next year, raising a total of $500 million, including what was raised in October, Sheikha said.
Reuters reported in November Careem was looking to raise up to $200 million from Chinese investors, and that it has been working with investment bank Jefferies as an adviser on investment options and fundraising, including a potential mergers and acquisition deal in the region with Uber.
“Discussions have happened with multiple parties in the context of our fundraising,” Sheikha said. “There is a lot of interest to own a piece of the Middle East Internet opportunity.”
He declined comment when asked if Uber could be a potential investor. Uber also declined to comment.
© Thomson Reuters 2018