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e& takes $400m majority stake in Careem

People, Person, Adult, Careem Reuters/Satish Kumar
The Careem app will continue to be led by founders Mudassir Sheikha, pictured, and Magnus Olsson
  • Emirates telco buys 50.03% share of company
  • Careem, which operates in 9 countries, was bought by Uber in 2020
  • App offers services such as ride hailing and mobile payments

The former Emirates Telecommunications Group Company, e&, has acquired a $400 million majority stake in Careem.

The super-app, which is owned by Uber, offers multiple services such as ordering taxis, grocery shopping and mobile payments.

e& has taken a 50.03 percent share of the company, which has operations in over 80 cities, covering nine countries across the Middle East, Africa and South Asia.

“Our investment will accelerate the development of the company and creation of a regional super app champion,” e& said in an Abu Dhabi bourse filing.

The deal, which is subject to regulatory approvals, customary closing conditions and administrative procedures, will be funded from e&’s existing cash balance, the filing stated.

Careem, which was launched in 2012 as a ride-hailing app, was bought by Uber for $3.1 billion in 2020.

The app will continue to be managed by founders Mudassir Sheikha and Magnus Olsson.

The UAE online retail sector will be valued at $8 billion by 2025, up from $5 billion in 2021 and $2.7 billion in 2020, according to a report published in March last year by e-commerce hub EZDubai and global research firm Euromonitor International.

A survey published in January last year by digital advertising services firm AppsFlyer found that 84 percent of UAE businesses said mobile apps were a “must” to remain relevant to their customers.

Such apps spent $74 million in 2021 on marketing costs, a year-on-year increase of 35 percent.

The UAE’s largest telecoms operator, e& underwent a strategic restructure last year aimed at expanding international growth and broadening its offering into financial technology and other services.

The trend for telcos to take stakes in startups is likely to become more commonplace in the Gulf as operators look for new revenue streams, Osman Sultan, who was the founding CEO of the UAE’s Emirates Integrated Telecommunications Company (known as du) from 2005 to 2019, told AGBI last week.

“Telecoms have all systematically, and rightly so, started to look at the startup space in the form of corporate venture capital,” Sultan said.

“What’s interesting for an entrepreneur is not just to have a telco bring money, but to use the telco as a way to accelerate the reach of their product and proposition. That could be a win-win.”