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.
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.