Saudi Support: Money-Losing Ride-Hailing Service Uber Gets Big Cash Infusion From World’s Oil Kingpin

Uber Technologies may not be profitable, but it’s growing and one of the world’s largest sovereign wealth funds has taken notice.

The increasingly ubiquitous Silicon Valley ride-hailing service said Wednesday the Saudi Arabian Public Investment Fund has kicked in $3.5 billion in venture capital investment, an amount so high that it wins the fund’s managing director, Yasir Al Rumayyan, a seat on Uber’s board of directors.

The investment was part of Uber’s latest fundraising round that values the company at $62.5 billion, according to a company statement to Reuters. The makes Uber more valuable than some of the world’s largest automakers, including Honda, Ford, General Motors and BMW.

Saudi Arabia’s $160 billion public investment fund uses a portion of the country’s oil revenue to build a social nest egg by investing in non-oil assets globally. The move comes about five weeks after Saudi Arabia announced a historic plan to broaden the country’s economy. The fund, established in 2008, will eventually hold about $2 trillion in assets, the kingdom has said.

For Uber, this is more than just a welcome infusion of much-needed capital to fund its global growth aspirations. It gives the company considerable clout as it expands its operations in the Middle East. Egypt is a key growth market where Riyadh holds considerable commercial and political influence. And the Gulf region appears to be embracing the concept of ride-hailing services, especially in Saudi Arabia where half the population (women) are prohibited from driving. Uber’s services cost less than hiring full-time drivers, which eat into Saudi family budgets, and the service is viewed as safer than using taxis.

Uber has risen quickly to become the world’s biggest ride-hailing service, but the company faces hurdles anywhere unions hold clout for the way it classifies drivers as benefit-less independent contractors at the mercy of the company’s pricing decisions. The company is also facing increasing competition among Chinese startups.