August 25, 2019, 2:06


Saudi Wealth Fund Loses $200M on Paper After Uber’s Rocky Stock Market Debut

Saudi Wealth Fund Loses $200M on Paper After Uber’s Rocky Stock Market Debut

Uber’s initial public offering (IPO), one of the biggest in US history, left stockholders and the firm’s board disappointed, as it fell nearly 8 per cent below the IPO price on the first day of trading.

Saudi Arabia’s sovereign wealth fund appears to be one of the biggest losers in Uber’s much-anticipated IPO.

Wrapping up a ten-year journey from a small ride-sharing start-up to a publicly traded company, Uber offered 180 million shares of common stock on the New York Stock Exchange (NYSE) on Friday, offering its stock at $45 per share. The IPO price gave the company an initial market cap of $75.5 billion.

Uber opted for a lower price than expected to avoid a repeat of the trading plunge suffered by rival service Lyft a month earlier. However, Friday marked a rocky debut for the San Francisco-based ride-hailing giant.

The stock opened on the first trading day at a disappointing $42 per share, down 6.7 per cent from the IPO price, and closed down at $41.57 (a drop of 7.6 per cent). By Friday’s close, Uber’s market cap fell by $6 billion to $69.7 billion — which delivered a collective paper loss of $618 million to investors who have poured billions of dollars into the company in recent years.

Saudi Arabia’s Public Investment Fund (PIF) injected $3.5 billion in Uber in 2016, when its stock was priced at $48.77, to acquire a 5 per cent stake.

READ MORE: ‘I Cannot Survive’: Uber, Lyft Drivers Stage US Strike for Higher Wages

Uber’s bumpy first trading day means that the stake is now worth approximately $3.3 billion, representing a paper loss of $201.5 million for the kingdom’s sovereign wealth fund. The PIF has not issued any comment on the matter as of the time of writing. The dive will only result in a direct financial loss if investors who purchased Uber shares at a higher price opt to liquidate their holdings.

The tech company’s biggest stockholder, with a 16.3 per cent stake, is Japan’s SoftBank, which invested roughly $7.7 billion through its Vision Fund last year. In addition to buying stock at $48.77 apiece, the $100-billion vision fund picked up a solid chink of shares from employees and existing stockholders at a discounted price of $32.97, which means that the Japanese investors might have even overall stayed in the black after the float.

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