Uber and the Awaited IPO, but First Let’s Solve the Regulation Issues $UBER
Even if the exact date of Uber’s IPO hasn’t been announced, there are several signs, such as the recent reports that a major Chinese investment group is leading their latest funding round, that the time for Wall Street is coming.
According to The Wall Street Journal, Chinese fund manager Hillhouse Capital Group is leading an investment in the ride-sharing company that could reach around $1 billion. The convertible bond deal involves buying bonds that can be converted into shares at a discount to the company’s IPO price. The longer it takes for Uber to go public, the greater the return for investors, providing a time-laden incentive for the company to launch an IPO soon. Uber had previously raised around $1.6 billion from the wealth-management division of Goldman Sachs in a very similar deal in January.
While having to develop its business in an increasing number of cities, the transportation network company headquartered in San Francisco has also to deal with several legal restrictions and legal issues.
Three weeks ago Uber rallied 400 drivers to testify in an employee classification lawsuit that they wanted to stay contractors.
If Uber loses the driver classification lawsuit, it may have to reclassify its California drivers as employees, which would cost it hundreds of millions in payroll taxes a year, not to mention back pay and penalties and the important fact that the company’s business model rides on the outcome.
What makes Uber special in the eyes of investors is its lower costs: it’s basically a piece of software connecting drivers to riders, which, for now, means it doesn’t have to pay those drivers’ health care, payroll taxes or workers’ compensation insurance.
Recently Uber declined to comment on Re/code’s analysis and instead offered this statement: “As employees, drivers would lose the flexibility and control they value most; instead they would drive set shifts, earn a fixed hourly wage, and lose the ability to drive with other ridesharing platforms.” The company also added that 73 percent of its “partners” prefer being their own boss instead of having a job with benefits and a salary.
To sum up, the biggest problem that could derail an Uber IPO is the growing list of cities and countries that have either banned Uber or suspended its services; until now the riding service provider has been halted or restricted in at least eight American cities as well as in India, Germany, The Netherlands, Thailand, South Korea, and other countries..