Careem, the Middle East-based ride-hailing company acquired by Uber in 2019, is splitting its super app business into a new start-up with a $400m investment from Emirates Telecommunications Group Company. Following the deal, Careem will be separated into two businesses: Careem Rides and Careem Technologies. Careem Technologies will run the Super App and all other verticals and will be jointly owned by e&, Uber and Careem’s co-founders, while Careem Rides will focus on the core ride-hailing product and be fully owned by Uber.
Careem, the ride-hailing company based in the Middle East that was acquired by Uber in 2019, is spinning out its super app business into a new startup backed by $400 million from Emirates Telecommunications Group Company (e&).
The deal, announced on Monday, saw e& purchase a 50.03% stake in the new company, called Careem Technologies, from Uber. Following the transaction, Careem will be broken into two companies: Careem Rides and Careem Technologies, according to a blog post from Careem CEO and co-founder Mudassir Sheikha.
The aim of the move is to make the Super App unit the dominant business. Careem Rides, which will be fully owned by Uber, will be staffed by 260 people and will focus on its core ride-hailing product. Ashish Labroo, who will report to Uber’s Rides leadership, will lead Careem Rides.
Meanwhile, Careem Technologies will operate the Super App along with all other verticals. This business will be jointly owned by e&, Uber, and Careem’s co-founders, including Sheikha and Magnus Olsson. The unit, which Sheikha will lead, will have around 1,400 employees.
Founded in 2012 as a ride-hailing rival to Uber, Careem has since diversified its business, adding food and package delivery, bus services, and credit transfers. It made a number of acquisitions, such as RoundMenu and Commut, to support this expansion. Uber acquired Careem in 2019 for $3.1 billion.
This latest move shows that Careem’s founders and its newest investor see the most potential in services that stretch well beyond ride-hailing. The Super App, which is available in 10 countries, combines all of Careem’s products, such as food delivery, bike rentals, and financial services that let users send and receive payments, and third-party services like cleaning into a single platform.
Sheikha said the $400 million in new funding will be used to “scale the Super App and build category-leading verticals in all our key markets.” With the additional funding, Careem Technologies plans to expand its presence in the Middle East and North Africa region and beyond. It also plans to develop new verticals that will allow it to provide a broader range of services to its users.
The move to spin out the Super App business comes as the ride-hailing industry faces increasing competition from other platforms. While Uber and Lyft dominate the market in the US, many other countries have their own regional players, such as Grab in Southeast Asia and Didi Chuxing in China.
However, with the rise of the Super App model, which allows users to access a range of services from a single platform, the industry is likely to become more competitive than ever. By expanding its services beyond ride-hailing, Careem is positioning itself to compete not just with other ride-hailing companies but with a range of different platforms that offer food delivery, financial services, and other services.
The Super App model has proven popular in many emerging markets, where users often have limited access to a range of services. By offering a wide range of services through a single platform, Careem hopes to become a one-stop shop for many users in the Middle East and North Africa region.
With its new funding, Careem Technologies will be well-positioned to take on this challenge. However, it will also face significant competition from other players, both regional and global. It remains to be seen whether the Super App model will prove successful in the long term, but for now, it seems that Careem is betting big on this emerging trend in the ride-hailing industry.
